Shein, which opted to float on the Hang Seng Index earlier this week, raised US$1.7 billion in its IPO, valuing it at US$26.5 billion.
The figure is significantly lower than it might have been had the business not been hit by higher import duties across its key markets, as well as growing competition from homegrown rival Temu. Investors would have also taken into account that the cheap fast fashion ‘gift-horse’ is on the way out.
Looking ahead, legislation against producers of cheap fast fashion and textile products – like the newly introduced law in France, which specifically targets both textile manufacturers and ‘operators of online interfaces’ with the threat of levies to be applied on a per item basis. If adopted across Europe, for example, the sale of massive volumes of unsustainable products will eventually be outlawed. Combined, as well, with the additional import duties on such personal imports already introduced by some countries, or promised by others, plus greater consumer awareness of the environmental cost of hitherto ‘cheap’ imported fashion – demand for cheap Chinese products will be decimated.
Many UK & European clothing businesses have been engaged in a race to the bottom over the past decade to try to compete with the likes of Shein and Temu. Quality has suffered, businesses have struggled to compete, with many failing whilst landfill sites are overrun with cast offs that cannot be recycled. With stronger legislation to cover the immense cost of dealing with the tidal wave of Chinese imports, there will be a better opportunity for local businesses to focus on quality, to near-shore or manufacture in their own countries, and win customers back.
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