Shein pledges to invest in UK and Europe ahead of potential IPO, ET Retail

Fast fashion chain Shein said it would invest 250 million euros ($271 million) over five years in Britain and Europe, as it grapples with criticism of its sales model that relies on cheap clothes and accessories being shipped from factories in China directly to customers around the world.

Shein, which is preparing for a possible listing on the London Stock Exchange, already sources its clothes from factories in Turkey, although the vast majority of its products are made by about 5,400 suppliers, mostly based in Guangzhou, China.

Textile associations and politicians in Europe have accused Shein of eroding local industries by flooding the market with clothes at prices that domestic factories and retailers cannot compete with, in part by using a tax break for parcels worth less than 150 euros entering the European Union. A similar tax break in the U.K. applies to parcels worth less than 135 pounds ($173).

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The EU is considering abolishing this limit as part of the customs reform project proposed by the Commission in May 2023.

Shein said Tuesday it would allocate €50 million for “potential investments in R&D or pilot Shein production facilities in Europe or the UK,” as well as initiatives to help brands and designers in the region reach a larger market through the Shein platform.

Shein, known for its $5 blouses and $10 dresses, is reportedly set to post sales of around $45 billion in 2023 and was valued at $66 billion in a funding round last year.

In an interview with Reuters, Donald Tang, Shein’s executive chairman, declined to provide further details on where the company intends to source its raw materials.

He added that the company is “keeping its options open” but noted that the facilities will likely be vendors rather than owned and operated by Shein.

He added that the share of Shein products manufactured in Turkey is currently insignificant compared to China, but is growing rapidly.

Shein also announced that it plans to invite more artists and designers from the UK and Europe to its incubation programme.

The announcement comes as the company must comply with new European Union rules that aim to ensure online platforms do not infringe intellectual property rights.

China-founded Shein also announced the launch of a “circular fund” with an initial investment of €200 million to support start-ups and companies across the region that are developing textile recycling technologies.

“Given the scale and reach of Shein… Shein can be a catalyst for widespread adoption across the industry,” Tang said.

It invites businesses, financial institutions and sovereign wealth funds to co-invest in the fund.

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