Fast fashion giant Shein attracted $1.7 billion during its highly anticipated Initial Public Offering (IPO) in Hong Kong, valuing the online retailer at approximately $26.3 billion.
The company's debut on the Hong Kong Stock Exchange was not smooth: shortly after trading began on Tuesday, shares of the fast fashion giant sharply declined. Although the company raised $1.7 billion (approximately 27.4 billion ringgit) in the IPO, its stock quickly fell to HK$43.72 (R90.20) from the initial listing price of HK$48.56 (R100.20).
This weak start presents a significant hurdle for the company, which has become one of the world's largest online fashion retailers by selling goods at exceptionally low prices. It also highlights the scrutiny Shein faces as regulators, governments, and investors closely examine the business model that fueled its incredible growth.
From a $100 Billion Valuation to $26 Billion
Shein's listing in Hong Kong values the company at approximately $26.3 billion (R424 billion). This is a sharp drop compared to nearly $100 billion (R1.61 trillion) the company commanded during private funding rounds in 2022.
The company spent years trying to go public; previous listings proposed in New York and London faced regulatory hurdles before Chinese authorities approved its placement in Hong Kong in July. Shein stated that the raised funds would be used to improve technology and expand international operations.
However, investors appear less convinced of the company's growth prospects than before. Morningstar analyst Lorraine Tan noted that Shein's revenue growth has slowed to less than 10% in 2025, which aligns with broader trends in the fast fashion industry.
Cheap Clothes Come with Rising Costs
Shein's appeal has always been simplicity: a vast array of trendy items produced quickly and sold online at prices difficult for traditional retailers to match. This model helped the company capture a massive audience. By the end of 2025, Shein had an average of 156 million monthly users in Europe alone.
This placed it behind Amazon, which has about 180 million European users, and AliExpress, which has 193 million. Nevertheless, the same business model is increasingly facing criticism. Shein has been investigated regarding its environmental impact, labor practices allegations, as well as privacy and copyright issues, while competitors like Temu and AliExpress intensify the fight for bargain-seeking customers.
The company has repeatedly denied forced labor accusations. CEO Donald Tan stated last year that Shein applies 'zero tolerance' to forced labor.
Tariffs Are Starting to Bite
One of Shein's biggest challenges is that governments are increasingly closing loopholes that allowed its ultra-low-cost international delivery model to function. The removal of import duty exemptions for small parcels in the United States has already had a financial impact. In 2025, Shein reported a net profit of $2.06 billion (approximately 33.2 billion ringgit), but in the first three months of this year, it reported a loss of $99 million (approximately 1.6 billion ringgit).
Europe has also tightened regulations. The European Union introduced a levy of 3 euros (approximately 56 ringgit) on goods in parcels valued under 150 euros (approximately 2804 ringgit), and France is introducing a separate charge for ultra-fast fashion. This fee could ultimately rise to almost 20 euros (approximately 374 ringgit) per garment. For a retailer built on selling extremely cheap individual items, even relatively small additional charges can be significant.
E-commerce analyst Juozas Kazyukenėnas predicts that Shein's short-term growth may turn negative. He argues that the company needs to revise its supply chain instead of relying too heavily on direct shipping from China to customers worldwide.
Shein Tries to Reconnect with China
There is also an interesting shift happening behind the scenes. Although Shein relocated its headquarters to Singapore in 2021–2022 amid increased scrutiny of Chinese companies, its Chinese roots remain central to the business's operation. CEO Sky Xu made his first public appearance in Guangdong earlier this year and pledged to increase the company's investment and resources in China. Analysts interpreted this move as an attempt to strengthen Shein's ties with its country of origin in preparation for a new growth phase. The Hong Kong listing may be part of this strategy.
The company now has access to fresh capital, but it is entering public markets at a completely different point in its history. Shein is no longer the high-growth newcomer that investors once valued at nearly $100 billion. It is a major global retailer facing tougher competition, higher costs, and much greater attention.
Its debut in Hong Kong suggests that investors will demand more than just cheap clothes and rapid growth before assigning a premium to the Shein brand again.