Marina Lubimova
The discount reflects more than weaker appetite for IPOs. The conditions that powered SHEIN’s rise — rapid growth, cheap cross-border shipping and a uniquely efficient Chinese supply chain are becoming harder to sustain.
From Tech Multiple to Retail Multiple
SHEIN was valued at $98.2 billion in 2022 and about $64 billion in a later funding round. Expectations for the Hong Kong IPO were recently around $40 billion to $50 billion. Bankers are now testing demand below $30 billion.
Investors are changing how they classify the company. Winston Ma, executive director of the Global Public Investment Funds Forum and a former managing director at China Investment Corporation, expects investors to “re-price Shein away from a pure hyper-growth tech platform” toward a physical retailer and logistics company exposed to global trade risks.
The financials support that shift. Revenue rose from $32.1 billion in 2023 to $38.8 billion in 2024 and $41.8 billion in 2025, but growth slowed to 8% last year. Net income fell 38.7% to $2.06 billion in 2025.
SHEIN then reported a $99 million net loss in the first quarter of 2026, partly because of a $328 million fair-value charge. More relevant for investors is its 2.9% operating margin.
Institutional investors on the HKEX will ... zero in on the 2.9% operating margin. Ma said.
At $30 billion, SHEIN would trade at roughly 0.7 times 2025 revenue and 14.6 times net income. The valuation looks cheap only if those earnings can hold.
The De Minimis Advantage Is Disappearing
SHEIN built its model around thousands of small production runs in China shipped directly to consumers. U.S. import rules made that system particularly profitable. The de minimis exemption allowed low-value packages to enter the country without the duties applied to conventional commercial imports. That advantage has been removed.
SHEIN said the change increased expenses and hurt sales growth. U.S. revenue fell 14% in the first quarter, and the company has considered raising prices to offset higher costs. Europe is adding pressure. The EU introduced a €3 fee on low-value e-commerce parcels in July, and SHEIN has warned that the impact could be similar to or greater than what it experienced in the U.S.
Sharon Iles, senior apparel analyst at GlobalData, said investors are increasingly focused on “profitability, regulatory exposure, and the sustainability” of SHEIN’s ultra-fast-fashion model.
The issue is not simply another tariff. Higher cross-border costs hit the logistics architecture that helped SHEIN undercut conventional retailers.
China Is Both the Moat and the Risk
Moving production elsewhere looks like an obvious response. SHEIN’s experience in Vietnam shows why it is difficult. The company expanded near Ho Chi Minh City as U.S.-China trade tensions increased, but by mid-2026 its logistics footprint there had been cut from roughly 15 hectares to six. Some suppliers that had moved production to Vietnam returned to China.
China’s garment ecosystem lets SHEIN order extremely small batches and replenish successful products within days. That combination of scale and flexibility is difficult to reproduce.
“Sourcing diversification beyond China has practical limits, said Sheng Lu, professor of fashion and apparel studies at the University of Delaware, particularly when the model depends on speed, flexibility, and extremely small production runs.
A Guangzhou factory manager involved in the Vietnam expansion reached a similar conclusion:
The low efficiency still makes it less viable than manufacturing in China.
SHEIN therefore faces an awkward trade-off. Moving away from China weakens one of its biggest operating advantages. Staying exposes it to tariffs and geopolitical risk.
Suppliers Have More Options
Competition is also reaching SHEIN’s supplier network. Temu, Amazon and TikTok Shop give Chinese manufacturers more ways to reach global consumers. Some smaller SHEIN suppliers are already using rival platforms to supplement their income.
Ping He, who has worked in operations management for SHEIN and TikTok Shop, described the change bluntly:
Shein is not the prettiest boy in town anymore. There are many more options now.
One former supplier, Jiang Gong Clothes, stopped working with SHEIN because margins had become too thin and small production runs were cumbersome.
“So we decided to drop them,” a factory manager told Reuters.
This matters because SHEIN’s supplier network has long been one of its strongest barriers to competition. More distribution options give factories bargaining power that they did not have during SHEIN’s fastest expansion.
New York, London, Hong Kong
SHEIN’s IPO route also captures its regulatory problem. The company first pursued New York, where political and supply-chain scrutiny complicated the listing. It then turned to London, but the process stalled. Chinese regulators have now cleared the way for a Hong Kong IPO.
Changing exchanges solves the listing venue. It does not change where SHEIN manufactures its products or where many of its customers live. The company remains dependent on Chinese manufacturing, Western consumers and favorable cross-border trade rules at the same time.
What Investors Get Below $30 Billion
The lower valuation also changes the investment case. SHEIN generated $41.8 billion in revenue last year and remains one of the world’s largest online fashion businesses. Its Chinese manufacturing network would be difficult and expensive for competitors to replicate.
GlobalData’s Iles argues that a lower valuation could make the IPO more attractive by bringing expectations closer to current market conditions. But she says the listing ultimately depends on SHEIN proving “durable growth and margin resilience.”
That is now the central question. At nearly $100 billion, investors were paying for SHEIN’s growth. Below $30 billion, they are being offered the same supply-chain machine at a steep discount — but with slower growth, thinner margins, higher import costs and greater regulatory exposure.
China makes that machine difficult to replicate. It also makes it difficult to de-risk. SHEIN’s IPO will test how much investors are willing to pay for one advantage when it has become inseparable from the company’s biggest liability.
Marina Lubimova
