Does it make sense for SheIn to be listed in the UK?

The rumor mill is abuzz with talk of China-born, Singapore-HQ online fashion brand #SheIn considering an Initial Public Offering on the London Stock Exchange. 

I recall when I first tracked the rumors for SheIn to go public in the US during the high time of Chinese companies' IPOs in the US, a senior executive of the company once, and twice, shrugged it off and said: our business is so good and we are not in a rush to raise money! 

Then came the trade war. Then came the pandemic. Then a long period of silence. Now it is London. This news has again sparked a myriad of reactions and speculations. 

But does it really make sense for SheIn to list in the UK?

The Case for Listing in the UK

- Market Access: The UK market may offer a diverse and sizeable consumer base, especially the unique image linked to the traditional financial hub.

- Regulatory Environment: Compared to the US, the challenges faced by Chinese companies in the US market, including heightened scrutiny, could be less severe in the UK - for now.

- Boost to #LSE: The LSE has been actively seeking high-profile companies to list, and SheIn's IPO could provide a significant boost.

Challenges of Listing in the UK

- Ethical Concerns: Listing in the UK could constantly expose the company to significant backlash from lawmakers and human rights organizations, potentially affecting sales and operations.

- Legal Risks: There are ongoing legal campaigns and advocacy groups that might push to block the listing due to the potential human rights breaches.

Considering Hong Kong as an Alternative?

If the UK listing plan does not materialize, there are rumors that SheIn may consider listing in Hong Kong. However, there are several factors to consider:

- Favorable Regulatory Environment? Yes. The refreshed Hong Kong Exchanges and Clearing (#HKex) is known for its favorable regulatory environment for Chinese companies, which will make the listing process smoother.

- Investor Base: #HKex has a deep and diverse investor base, including many Mainland Chinese investors who can trade on the Hong Kong market through the Stock Connect scheme.

- Reputation and Trust? That is literally a question mark.

One reason SheIn might be cautious about listing in Hong Kong is the desire to avoid being perceived strictly as a "Chinese company" as its massively successful sales have all grown elsewhere. By listing in a more international market like the UK, SheIn might aim to distance itself from the geopolitical and regulatory issues that have affected other Chinese companies in the US.

Takeaways

The decision for #SheIn to list in the UK or Hong Kong will ultimately depend on how the company navigates the challenges and opportunities presented by each market. While the UK offers international market access in the long run, Hong Kong's proximity to the Mainland and favorable regulatory environment provide a more supportive setting for an IPO.