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Shein IPO Challenges Consultancy Report
Shein IPO Challenges Consultancy Report
Shein IPO Challenges Consultancy Report
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Contents
Executive Summary.....................................................................................................................................3
Introduction.................................................................................................................................................4
US IPO Challenges Faced by Shein...............................................................................................................6
Purpose of the report..................................................................................................................................7
Impact of Research on Stakeholders............................................................................................................8
Connection and Impact on Stakeholders.....................................................................................................8
Evaluation of Impact on Stakeholders.........................................................................................................9
Evaluation and Analysis with Secondary Data............................................................................................11
PEST Framework....................................................................................................................................11
Carroll’s Pyramid Framework.................................................................................................................16
Recommendations and Conclusions..........................................................................................................19
Recommendations.................................................................................................................................19
Conclusion.............................................................................................................................................22
Bibliography...............................................................................................................................................23
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Executive Summary
Shein, the Chinese e-commerce giant, embarked on a strategic move to file for a U.S.
IPO in November 2023, with aspirations to transform into a global powerhouse valued at $66
billion. Despite being a major player in the global fashion industry, Shein's IPO plans
encountered formidable challenges, primarily stemming from allegations of forced labor in its
supply chain, mainly sourcing materials from China's Xinjiang region. This issue gained
prominence as regulatory bodies, such as the House Select Committee on the Chinese
Communist Party and the Cyberspace Administration of China, initiated investigations, unveiling
concerns about exploiting tariff law loopholes and scrutiny from U.S. and Chinese regulators.
The geopolitical tensions between the U.S. and China further complicated Shein's efforts to
position itself as a global entity. This comprehensive report aimed to analyze the challenges
The impact of Shein's IPO challenges and forced labour allegations extended across a
spectrum of stakeholders. Top management and major shareholders, including JAFCO Asia, IDG
Capital, Sequoia Capital China, and Tiger Global Management, faced a threat to financial gains.
At the same time, the company's ethical practices directly affected factory workers and sales
high sensitivity to ethical concerns, potentially leading to a shift in loyalty if the company failed
partners, and the U.S. Securities and Exchange Commission (SEC), played pivotal roles in
determining the fate of Shein's IPO, tying the company's success to regulatory approval and
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compliance with legal standards. The critical evaluation revealed the complex nature of the
challenges, tarnishing Shein's brand image and reputation and emphasising the need for proactive
third-party audits, and collaboration with ethical organizations to ensure a supply chain free from
forced labour. Ensuring legal compliance required a thorough review of supply chain practices
and cooperation with regulatory bodies for transparent communication. Addressing political
challenges through ethical sourcing practices was another crucial factor, emphasising the need
for proactive measures to navigate complex international relations, trade policies, and regulatory
scrutiny. Based on Carroll's Pyramid of Corporate Social Responsibility and the PEST
framework, these recommendations aimed to address the forced labour allegations and contribute
to Shein's overall ethical standing, securing a successful IPO and safeguarding its future in the
Introduction
Shein, a Chinese e-commerce giant, has carved a significant niche in the global fashion
industry since its inception in 2012. Known initially as SheInside, the company rebranded to
Shein in 2015 and has rapidly become the world's largest e-commerce-only fashion retailer,
boasting a valuation of over 100 billion U.S. dollars (Statista, 2023). With a commitment to
providing affordable and accessible fashion, Shein has attracted millions of consumers
worldwide and gained immense popularity through social media platforms like TikTok,
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Shein's strategic move towards a U.S. IPO, with a reported valuation of $66 billion,
encounters substantial hurdles stemming from allegations of forced labor in its supply chain,
notably sourcing materials from China's Xinjiang region (Fonrouge, 2023). This issue gained
prominence as the House Select Committee on the Chinese Communist Party initiated an
investigation into Shein's supply chain practices, probing the sourcing of cotton and other
materials from Xinjiang. The scrutiny revealed concerns that Shein's products might exploit a
tariff law loophole, allowing entry into the U.S. without proper scrutiny (Fonrouge, 2023).
another layer of complexity to Shein's IPO plans by subjecting the company to Chinese
regulations (Bosa, 2024). Adding further complexity to Shein's IPO plans is the geopolitical
tension between the U.S. and China, with regulatory bodies scrutinizing the company's
operations on both fronts (Bosa, 2024). The House panel's findings indicate the potential
exploitation of a tariff law loophole, allowing Shein's products to evade proper scrutiny, further
This report is structured to comprehensively examine the challenges impeding Shein’s IPO
aspirations. The ensuing sections will evaluate Shein’s current challenges, including forced
labour allegations, the geopolitical complexities, and the scrutiny Shein’s Chinese listings face.
The purpose of the report will be identified. Subsequently, a stakeholder analysis of both internal
and external stakeholders will be done, using a Mendelow matrix of power and interest, then a
detailed critical evaluation will follow, using secondary data to fully understand the implications
and generate recommendations and conclusions will emerge from the findings, providing
actionable insights for Shein to navigate these challenges successfully, thereby answering the
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US IPO Challenges Faced by Shein
In November 2023, Shein confidentially filed for U.S. IPO with China Securities
Regulatory Commission (CSRC), aiming to transform from a fast-fashion giant into a global
powerhouse with a reported valuation of $66 billion. The company, which manufactures most of
its merchandise in China, has been eyeing a U.S. IPO for at least three years. The IPO is a
strategic move for Shein to transform from a $5 T-shirt company into a global powerhouse
(Fonrouge, 2023). However, the IPO plans are facing significant challenges, primarily centered
around allegations of forced labor in Shein's supply chain, mainly sourcing materials from
China's Xinjiang region. The forced labor issue came to the forefront as the House Select
Committee on the Chinese Communist Party initiated an investigation into Shein's supply chain
practices. The committee probed the sourcing of cotton and other materials from China's
Xinjiang region, where evidence of genocide, torture, and forced labor against the Uyghur ethnic
group has raised concerns globally (Meisenzahl, 2024). The House panel's investigation revealed
concerns that Shein's products could enter the U.S. through a tariff law loophole, de minimis,
exempting packages valued under $800 from import duties and extensive customs scrutiny
(Fonrouge, 2023). In 2021, the U.S. banned the import of cotton and other products from
Xinjiang. Still, Shein's shipping model, which involves direct shipment to American consumers,
may exploit a tariff law loophole, allowing products to evade proper scrutiny (Fonrouge, 2023).
Despite Shein's claims of a "zero-tolerance policy for forced labor" (Or and Rockeman,
2023), investigations revealed positive test results for unapproved regions, raising concerns
about the company's supply chain practices. Testing conducted by Oritain, a third-party supply
chain firm, affirms these allegations. Between August 2022 and November 2023, Oritain
conducted 2,762 tests on Shein's yarn, fabric, and finished products, revealing that 1.7% tested
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positive for cotton from unapproved regions, specifically Xinjiang (Fonrouge, 2023). This data,
coupled with Shein's acknowledgment of the presence of Xinjiang cotton in its raw materials,
intensifies concerns about labor practices in the company's supply chain. U.S. lawmakers,
including U.S. Representative Jennifer Wexton, have raised these concerns, demanding proof
that Shein's products are not sourced from forced labor. Furthermore, the Cyberspace
information handling in its supply chain. This review adds another layer of complexity to Shein's
IPO plans, as it positions the company as subject to Chinese regulations, potentially impacting its
ability to go public without Beijing's approval. Amidst the growing tensions between the U.S.
and China, Shein's efforts to portray itself as a global entity face challenges as regulatory bodies
The impact of forced labor allegations and review extends beyond the ethical realm,
significantly tarnishing Shein's brand image and reputation. The investigation by the House panel
and ongoing scrutiny from lawmakers raise serious concerns about the company's commitment
to ethical business practices. With mounting pressure and a critical evaluation of its supply chain,
Shein faces delays in its IPO plans and a need to address these challenges to regain trust and
credibility (Bosa, 2024). The forced labor issue, labor practices, and ties to China present a
multifaceted challenge that Shein must navigate to secure a successful IPO and safeguard its
impact Shein in China. The report will recommend how Shein would resolve their forced labor
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Impact of Research on Stakeholders
Internal Stakeholders
Shareholders: JAFCO Asia, IDG Capital, Sequoia Capital China, Tiger Global Management
External Stakeholders
Shein's Manufacturing Partners (e.g., Quanzhou Youfan Import and Export Trading Company)
stakeholders. For the top management and major shareholders, the success of the IPO is crucial
for financial gains, making it imperative to address the forced labor concerns promptly. Factory
and sales workers are directly affected by the company's ethical practices and may face
repercussions if the allegations persist. Customers, the lifeblood of Shein, are sensitive to ethical
concerns and may shift loyalty if the company fails to address these issues adequately.
Externally, regulatory bodies such as China's Cyberspace Administration and CSRC play a
pivotal role in determining the fate of Shein's IPO, tying the company's success to regulatory
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approval. Like Queen of Raw, manufacturing and collaborative partners may reconsider their
associations based on ethical considerations. The SEC represents the legal scrutiny Shein faces in
the U.S., impacting the company's ability to operate seamlessly in the market.
SEC
al. Company)
The success of Shein's IPO is pivotal for top management and major shareholders as it directly
influences their financial gains. The forced labor allegations significantly threaten the IPO's
success, impacting the company's valuation and investor confidence. Addressing these concerns
promptly is crucial for maintaining trust and securing financial benefits for top management and
shareholders.
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Factory Workers (Low Power, High Interest)
The ethical practices of the company directly impact factory workers. If forced labor allegations
persist, it may lead to reputational damage and potential repercussions for the workers.
Resolving these concerns is essential to ensure a positive work environment and safeguard the
considerations. The forced labor allegations can significantly tarnish Shein's brand image and
lead to a shift in customer loyalty. Addressing these concerns is vital for retaining customer trust
Regulatory bodies in China, particularly the Cyberspace Administration and CSRC, hold
significant power in determining Shein's fate in the IPO process. The forced labor allegations and
the security review impact the regulatory approval process, making Shein need to address these
The U.S. SEC represents the legal scrutiny Shein faces in the U.S. market. Addressing forced
labor concerns is crucial for navigating the legal landscape and ensuring compliance with U.S.
regulations. Failure to do so may lead to delays in the IPO process and potential legal
consequences.
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Ethical considerations may influence manufacturing and collaborative partners to reassess their
associations with Shein. Addressing forced labor concerns is essential to maintain positive
The PEST framework (Political, Economic, Social, and Technological) is a strategic tool that
helps analyze the external macro-environmental factors affecting an organization (Heubel, 2022).
We will use this framework to evaluate the business's political, economic, and social impacts in
Political Factors
The political factors surrounding Shein's IPO involve a complex interplay of international
relations, trade policies, and regulatory scrutiny. It presents a significant challenge to Shein's IPO
plans, mainly due to the investigation initiated by the House Select Committee on the Chinese
Communist Party. The focus on forced labor allegations in China's Xinjiang region has escalated
political scrutiny, creating hurdles for Shein to navigate in its quest for regulatory approvals. The
House panel's concerns about Shein potentially exploiting tariff law loopholes to import products
from Xinjiang without proper scrutiny add a layer of complexity to the political landscape. This
is exemplified by the de minimis loophole, which exempts packages valued under $800 from
import duties and extensive customs scrutiny. According to a report by Fonrouge (2023), the
House panel's investigation raised concerns that Shein's products might enter the U.S. through
this loophole, thereby bypassing the ban on the import of cotton and other products from
Xinjiang imposed by the U.S. in 2021. Statistics from testing conducted by Oritain, a third-party
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supply chain firm, between August 2022 and November 2023 revealed that 1.7% of Shein's
tested yarn, fabric, and finished products contained cotton from unapproved regions, specifically
Xinjiang. This data aligns with the U.S. ban on products linked to forced labor in Xinjiang,
further complicating Shein's political landscape (Davidson, 2023). The investigation has also
triggered political responses, such as U.S. Representative Jennifer Wexton's statement urging
greater scrutiny of Shein's supply chain and the call for SEC intervention to ensure compliance
Shein has undertaken tests to address concerns about forced labor in its supply chain. The
company contracted Oritain, a supply chain tracing firm, to conduct tests on the origin of its
cotton fibers, aiming to trace them down to specific farms. Between June 2022 and July 2023,
Oritain conducted 2,111 tests, resulting in 46 positive results (a rate of 2.1%) indicating the
presence of cotton from banned regions. These tests focused on raw materials, and when a
positive result was found, Shein removed the implicated raw material from production
(Fonrouge, 2023). Shein's head of strategy and corporate affairs, Peter Pernot-Day, highlighted
the company's commitment to reducing positive test results to zero, implementing monthly
testing across all 40 mills and ceasing the purchase of cotton from China.
In response to the forced labor allegations, Shein has emphasized its zero-tolerance
policy for forced labor (Or and Rockeman, 2023). The company has spent $1.28 million on
Capitol Hill lobbying in an effort to shape its image and address concerns. Shein has also
engaged with lawmakers, including critics, to communicate its efforts to diversify its supply
chain away from China, citing initiatives to source more goods from countries like India
(Masters et al., 2023). Additionally, Shein has partnered with Oritain to conduct rigorous
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testing on its cotton supply chain, and according to the results, the company claims to fare better
than the industry average in terms of positive tests for cotton from unapproved regions.
Moreover, the broader geopolitical tensions between the U.S. and China further
complicate Shein's efforts to portray itself as a global entity. The ongoing U.S.-China trade
dynamics and the heightened scrutiny of Chinese companies listing in the U.S. contribute to the
multifaceted political challenges Shein must navigate. The recent regulatory crackdown on
overseas listings of Chinese companies, as exemplified by the case of Didi Global, sets a
backdrop of increased regulatory uncertainty for Shein (Bosa, 2024). The political factors
affecting Shein's IPO extend beyond U.S. borders, with Chinese regulators conducting a security
review of Shein. This adds another layer of complexity, positioning the company as subject to
Chinese regulations, potentially impacting its ability to go public without Beijing's approval.
Amid growing tensions between the U.S. and China, Shein's efforts to portray itself as a global
entity face challenges as regulatory bodies scrutinize its operations (Bloomberg, 2024).
Therefore, the political landscape influences the IPO process in the U.S. and introduces
regulatory hurdles in China, highlighting the multifaceted nature of Shein's political challenges.
Evaluation
Despite Shein's efforts to address forced labor concerns through testing, lobbying, and
diversifying its supply chain, challenges persist. The ongoing scrutiny and bipartisan calls for
verification indicate a lack of confidence among U.S. lawmakers regarding Shein's commitment
to eradicating forced labor from its supply chain. The positive test results, while lower than the
industry average, highlight the complexity of ensuring a completely clean supply chain. Shein's
lobbying activities may be seen as attempts to influence perception rather than substantively
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addressing the core labor-related issues (Masters et al., 2023). The skepticism from lawmakers
and ongoing investigations suggest that Shein has not fully convinced regulators and
stakeholders of the integrity of its supply chain practices, potentially posing obstacles to a
Economic Factors
Economic considerations are pivotal for Shein's IPO success, given its reported valuation
of $66 billion and ambitions to transform into a global powerhouse. The global economic
landscape and the relationship between the U.S. and China play crucial roles in shaping Shein's
prospects in the IPO market. Bloomberg reports indicate that Shein could seek a valuation of up
to $90 billion in its IPO, making it a substantial offering in the consumer market (Fonrouge,
2023).
Crucially, the forced labor allegations pose a significant economic threat to Shein's IPO
plans. According to Bloomberg's report, Shein's IPO faces skepticism, and the controversies
surrounding forced labor may hinder the company's growth trajectory. Economic considerations
come to the forefront as investors and regulators question how Shein plans to manage challenges
unrelated to maintaining its app's dominance (Fonrouge, 2023). The economic disadvantage of
an IPO lies in increased disclosure requirements and public scrutiny, as highlighted by David J.
Representative Jennifer Wexton, urging greater scrutiny of Shein's supply chain before the IPO.
The economic impact is not only limited to delays in the IPO process but extends to the public
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According to Derek Yan, senior investment strategist at KraneShares, a China-focused
investment manager, Shein's SEC filing for its IPO may prompt detailed disclosures on
regulatory concerns and lawsuits, potentially impacting the company's valuation and investor
interest 9(Liu, 2024). The looming risks could divert management's attention away from
maintaining the app's dominance, centered on offering ultra-low-cost clothing, with prices as low
as $2 (Or and Rockeman, 2023). This scrutiny may raise investor inquiries about the company's
ability to navigate challenges beyond its core business, potentially influencing market perception
Additionally, economic tensions between the U.S. and China complicate Shein's
economic landscape. The ongoing geopolitical tensions could further complicate Shein's efforts
to position itself as a global entity. As Bosa (2024) report suggests, scrutinizing Shein's IPO
involves regulatory concerns about Chinese firms listing in the U.S., reflecting broader economic
and political considerations (Bosa, 2024). The economic challenges arising from geopolitical
tensions may affect Shein's ability to navigate the IPO process seamlessly. For instance, the
potentially impacting the IPO's success. The economic impact is restricted to Shein and ripples
through its network of shareholders, including JAFCO Asia, IDG Capital, Sequoia Capital China,
and Tiger Global Management, who are directly tied to the company's financial performance.
Social Factors
Shein's social factors revolve around its brand image and reputation, which are crucial for
its customer base of young, fashion-conscious consumers aged 25 to 34. The forced labor
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allegations directly impact Shein's social standing, tarnishing its brand image. Customers are
increasingly sensitive to ethical considerations, and the allegations can lead to a shift in loyalty if
Shein fails to address these concerns adequately. Representative Jennifer Wexton's vocal
criticism and the Uyghur Forced Labor Prevention Act reflect the social expectations for
companies to ensure ethical practices in their supply chains (Fonrouge, 2023). The company's
claim of a "zero-tolerance policy for forced labor" faces challenges as investigations reveal
positive test results for unapproved regions, specifically Xinjiang (Or and Rockeman, 2023). The
statistics from Shein's testing, indicating that 2.1% of its cotton tested positive for unapproved
philanthropic aspects (Carroll, 2016). In the context of Shein's forced labor allegations and IPO
challenges, we will analyze how the Pyramid can guide resolving these issues.
Economic Responsibilities
profitability and creating value for shareholders. Shein's IPO, with its reported valuation of $66
billion, clearly indicates its commitment to economic responsibilities. However, the forced labor
allegations significantly challenge these economic responsibilities. The potential delays in the
IPO process and the impact on investor confidence directly affect Shein's financial obligations
(Fonrouge, 2023). The company's success in addressing these allegations will determine its
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ability to fulfill its financial responsibilities by securing a successful IPO and maintaining
shareholder value.
KraneShares' Senior Investment Strategist, Derek Yan, anticipates that the SEC will request
comprehensive disclosures from Shein regarding regulatory concerns and legal issues,
potentially impacting the company's valuation and investor interest (Liu, 2024). Yan notes that
investors may be concerned about the management's allocation of time dealing with challenges
unrelated to the platform's core focus of selling affordable clothing (Or and Rockeman, 2023). As
Shein navigates potential obstacles related to regulatory scrutiny and lawsuits, the valuation and
Legal Responsibilities
Shein is currently facing intense scrutiny in the lead-up to its planned IPO in the U.S., with
Representative Jennifer Wexton, a prominent critic, urging greater examination of the company's
supply chain. Wexton, a Democrat from Virginia, has been particularly vocal, co-sponsoring the
Uyghur Forced Labor Prevention Act (UFLPA) aimed at banning products from China's Xinjiang
region. This legislation comes in response to an investigation revealing scientific evidence that
Shein's clothing contains cotton produced in Xinjiang through alleged forced labor.
Representative Wexton, along with other members of Congress, has called upon the U.S.
Securities and Exchange Commission (SEC) to mandate that Shein proves its supply chain is free
of forced labor before approving any IPO applications. Shein, in response, asserts a zero-
tolerance policy for forced labor, emphasizing that only 2.1% of its tested cotton was unapproved
(Fonrouge, 2023). Nevertheless, the company's IPO faces heightened scrutiny due to concerns
over its sourcing practices, particularly in light of the UFLPA. In response to the scrutiny
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surrounding its IPO, Shein has taken measures to defend its position. The company has
emphasized its zero-tolerance policy for forced labor and highlighted the relatively low
percentage of unapproved cotton in its supply chain (Or and Rockeman, 2023).
However, the lack of absolute assurance regarding forced labor in its sourcing processes has led
to increased skepticism and calls for more concrete evidence. The company's relocation of its
attempt to present itself as a global entity, addressing concerns tied to its Chinese roots (Or and
Rockeman, 2023). Yet, the ongoing legal challenges, especially those related to potential forced
labor in its supply chain, remain a significant hurdle. Shein's response may require more
transparent and verifiable documentation of its supply chain practices to alleviate concerns and
Ethical Responsibilities
Ethical responsibilities, situated at the next level, involve practices beyond legal requirements
and contributing to societal well-being. The forced labor allegations directly impact Shein's
ethical standing, with claims of sourcing materials from regions associated with human rights
abuses. The scrutiny from lawmakers, ethical supply chain firms like Oritain, and public calls for
transparency highlight the ethical challenges Shein faces (Fonrouge, 2023). Addressing these
concerns is essential for meeting ethical responsibilities and safeguarding the company's brand
image and reputation. Shein's commitment to a "zero-tolerance policy for forced labor" aligns
with ethical responsibilities (Or and Rockeman, 2023), but the challenge lies in proving the
Philanthropic Responsibilities
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At the apex of Carroll's Pyramid are philanthropic responsibilities, involving contributions to the
well-being of society beyond legal and ethical obligations. Shein's philanthropic role is
intertwined with its commitment to ethical sourcing and labor practices. By ensuring a
transparent and honest supply chain, Shein can positively contribute to societal well-being.
However, the forced labor allegations create a philanthropic dilemma, requiring Shein to
demonstrate its dedication to social welfare through concrete actions, such as verified supply
Limitations
In evaluating and analyzing secondary data, it is crucial to acknowledge the limitations inherent
in the data collection process. Potential constraints include the lack of real-time information,
available sources. Additionally, direct engagement with key stakeholders or Shein representatives
may be necessary to gain insight into the IPO challenges and allegations of forced labor.
Based on the evaluation of Shein's IPO challenges and forced labor allegations, the following
recommendations are proposed to address the identified issues and fulfill the purpose of the
report:
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Carroll's Pyramid of Corporate Social Responsibility places ethical responsibilities as
crucial beyond legal obligations, focusing on practices that contribute to societal well-being.
Ethical responsibilities are vital in addressing the challenges and fulfilling the report's purpose in
the context of Shein's forced labor allegations. Carroll emphasizes that ethical practices
contribute to the broader social good and are essential for a company's reputation and brand
image. Shein should prioritize strengthening its ethical responsibilities to address the forced
labor allegations. Firstly, the company should enhance transparency by proactively disclosing
comprehensive information about its supply chain practices, specifically regarding sourcing
materials from Xinjiang (Fonrouge, 2023). This transparency will demonstrate a commitment to
ethical sourcing and address concerns raised by regulatory bodies and third-party firms.
Secondly, Shein should conduct independent third-party audits of its supply chain to verify
compliance with ethical standards. This proactive approach aligns with moral responsibilities and
fosters trust with key stakeholders, including customers and investors. Furthermore, engaging
with reputable, ethical organizations and NGOs specializing in labor rights and supply chain
ethics can provide expert guidance, ensuring Shein adopts and maintains best practices in its
paramount in the context of Shein's forced labor allegations and IPO challenges. Carroll
emphasizes that meeting legal obligations is not only a requirement for regulatory approval but
also essential for building trust with stakeholders. To address legal responsibilities and navigate
regulatory scrutiny, Shein must ensure strict adherence to laws and regulations related to forced
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labor and supply chain practices. Firstly, a thorough legal review of the supply chain practices
should be conducted to identify and rectify potential violations, particularly regarding laws such
as the Uyghur Forced Labor Prevention Act (UFLPA) (Meisenzahl, 2024). This proactive
measure can help mitigate legal risks and demonstrate a commitment to ethical business
practices. Additionally, active collaboration with regulatory bodies, including the U.S. SEC and
communication and cooperation, Shein can showcase its dedication to legal compliance,
with expertise in international trade laws, labor regulations, and IPO processes can provide
valuable guidance, ensuring Shein effectively navigates the complex legal landscape associated
Based on the evaluation of political factors using the PEST framework, it is evident that
Shein faces significant challenges in navigating the complex international relations, trade
policies, and regulatory scrutiny surrounding its IPO plans. To address these political challenges,
Shein should prioritize a proactive and transparent approach in its supply chain management,
particularly in the sourcing of raw materials from regions associated with forced labor and
human rights abuses, such as Xinjiang. To mitigate the impact of the investigation initiated by
the House Select Committee on the Chinese Communist Party, Shein should strengthen its
commitment to ethical sourcing by implementing robust verification mechanisms for its supply
chain (Singh, 2024). This ensures that raw materials, especially cotton, are not sourced from
banned regions like Xinjiang. Additionally, Shein should enhance communication with
regulatory bodies, such as the China Securities Regulatory Commission (CSRC) and the U.S.
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Securities and Exchange Commission (SEC), providing clear evidence of its compliance with
ethical and legal standards (Meisenzahl, 2024). Additionally, Shein should communicate
transparently about its supply chain practices, demonstrating a "zero-tolerance policy for forced
labor" through concrete actions, thereby addressing concerns raised by U.S. Representative
Jennifer Wexton and the House Select Committee (Fonrouge, 2023). By aligning its practices
with ethical expectations, Shein can navigate the intricate political landscape, securing regulatory
Conclusion
underscores the multifaceted nature of the company's hurdles. The forced labor issue,
geopolitical tensions, and regulatory scrutiny pose significant threats to Shein's IPO success. The
impact on stakeholders, including top management, shareholders, factory workers, sales workers,
customers, and regulatory bodies, highlights the urgency for Shein to address these challenges
proactively. Based on Carroll's Pyramid of Corporate Social Responsibility and the PEST
compliance, and addressing political challenges through transparent and honest sourcing
practices. By implementing these recommendations, Shein can mitigate risks associated with
forced labor allegations, enhance its brand image, rebuild trust with stakeholders, and navigate
the complex landscape of regulatory approvals, ultimately securing a successful IPO and
Page 22 of 25
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