Shein, the fast fashion giant that has spanned the globe, is generating a significant round on the downside as the startup world braces for a funding crisis. According to financial times.
Shein denies the accuracy of some of the information, a spokesperson for the firm told TechCrunch when asked to confirm the details of the report.
One must wonder what part of the report got it wrong. To be fair, Shein’s plummeting valuation is not an anomaly in today’s e-commerce world. Pinduoduo, the marketplace that has managed to threaten Alibaba’s Taobao dominance in China by offering attractive deals, has seen its market capitalization fall to around $100 billion from a peak of $240 billion in February 2021.
Pinduoduo is now pinning its hopes on its sister platform for foreign buyers, Temu, which is gaining some traction in the US.
Sea, which operates Southeast Asia-focused e-commerce giant Shopee, has lost more than 80% of its market capitalization since November 2021. Shopee cut roughly 7,000 jobs in just six months to offset the losses, according to Bloomberg . reported in November.
Compared to other eCommerce counterparts, Shein’s drawdown doesn’t seem too terrible.
Shein still plans to go ahead with its initial public offering, which could launch this year, according to the FT report. Shein, which emerged from China’s reckless and cutthroat world of export e-commerce, has a lot to figure out before going public. The company has been preparing. On one hand, it has made its Singapore office the de facto holding companyat a time when China tightens regulations on overseas listings and cross-border data transfers, and US regulators increase scrutiny over China-related tech companies.
Shein has also significantly stepped up its ESG (environmental, social and governance) efforts. But it’s unclear how the company can remake itself to be “socially responsible” without disrupting its business model, namely fast fashion, which is fundamentally destructive to the environment. Multiple investors TechCrunch spoke to previously also pointed to potential “accounting compliance” issues, as China’s apparel manufacturing industry is known for shady billing practices and tax evasion.
