Shein's Hong Kong debut disappoints as valuation plummets 74% from $100bn peak

Shein's debut on the Hong Kong stock exchange on Tuesday was supposed to be a vindication. Instead, it was a reckoning. The fast-fashion retailer, once valued at nearly $100 billion in April 2022, priced its shares at HK$48.56 and raised HK$13.6 billion—but the market immediately punished it. Within minutes of trading, the stock fell as much as 10%, pushing the company's valuation below $25 billion. By day's end, shares had recovered most of that loss, closing at HK$48.50, down just 0.12%. The company that had been the third most valuable startup in the world four years earlier was now worth roughly one-quarter of that peak.

The Hong Kong listing was itself a retreat. Shein had originally planned to go public in New York, but US regulators blocked the move over forced labour concerns in its supply chain. The company then explored a £50 billion flotation in London, only to face the same questions from campaigners, MPs, and investors. Hong Kong became the fallback—a market where the company could finally access public capital, but one that offered no escape from the fundamental problem: the business model that had made Shein valuable was collapsing under regulatory pressure worldwide.

At its core, Shein's strategy was simple and ruthless. The Singapore-headquartered company, founded by entrepreneur Chris Xu, operated almost entirely from China but sold exclusively outside it. It shipped goods in small packages to exploit a tax loophole—the "de minimis" exemption that exempted low-value imports from duty. This allowed Shein to undercut traditional retailers on price while avoiding the tariffs that competitors paid. For years, it worked. But governments were closing the door.

The US struck first. When it removed the de minimis exemption on small packages, Shein's sales in its largest market collapsed. The company swung from a net income of $395 million in the first three months of 2024 to a loss of $99 million in the same period this year. The EU followed, introducing a €3 duty on small parcels from outside the bloc in June and signalling plans to phase out the exemption entirely. The UK committed to doing the same by October 2028. On the very day Shein went public, France began imposing penalties on fast-fashion items—ranging from €0.25 for socks to €12 for a coat—designed to curb the surge in cheap goods from retailers like Shein and its Chinese rival Temu. China's commerce ministry called the French law discriminatory and a potential violation of World Trade Organization principles, but the penalties were coming anyway.

Shein had tried to address the forced labour allegations that had blocked its US listing. The company said it had tightened supplier policies, enforced through regular audits, with any violations of child or forced labour standards triggering immediate contract termination. But the reputational damage had been done, and the regulatory walls were closing in faster than any policy change could overcome.

Yet Shein still floated as one of the world's largest listed fashion groups. At $26 billion, its valuation was roughly equivalent to H&M, the Swedish retailer. Inditex, which owns Zara, was worth about $213 billion—eight times larger. The gap between what Shein had been and what it had become was stark. As Leigh Gui, the company's chief financial officer, struck the gong to mark the start of trading, he invoked the company's slogan: "Let global consumers enjoy the sound of fashion." But the sound the market heard was the closing of doors.