Why is Shein under fire? Fast-fashion brand and more drama explored

Shein, currently a buzzword in the fashion world, is drawing widespread attention for various reasons. Rising from its origins in China, this women's fashion brand has swiftly ascended to the forefront of the fast-fashion industry, marking a remarkable journey of growth and success.

This reputable name in the fast fashion industry has recently submitted documents to US financial authorities. This entire drama seems to be for an Initial Public Offering (IPO) in the United States.

Known for dominating the online fast fashion market, Shein operates through a vast network of small-scale manufacturers in China and boasts an extensive digital marketing reach.

Despite facing past controversies over issues like cross-labeling, sustainability, and material quality, the Chinese fashion powerhouse is now taking steps to list itself in the US stock market, according to recent reports.

Recently, this fashion brand for women has set off on a crucial journey, opting to confidentially file for an IPO. The market valuation of this brand has been a point of keen discussion since then.

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Shein: About the fast-fashion brand's controversy

Concerns about the use of cotton produced with forced labor in China’s Xinjiang region have been a significant point of contention. This year, 16 state attorneys general formally requested the Securities and Exchange Commission to scrutinize the brand's practices before allowing its IPO.

An IPO is the process through which a company opts to make its shares available for public purchase, including everyday investors. During this process, the company chooses how many shares to sell. An investment bank helps set the starting price for these shares by estimating their potential popularity among buyers.

As the fashion label prepares for its IPO, the company is aiming for a valuation between $80 billion and $90 billion, according to Bloomberg. If successful, this ambitious target would make Shein's offering one of the largest IPOs ever.

The move towards going public secures the rapid growth of this label and its impact on the fast-fashion industry. As reported by notable outlets such as the Wall Street Journal and CNBC, this decision signifies a crucial juncture in the brand's trajectory. However, this journey is not without its challenges.

Electing financial giants like Goldman Sachs, JPMorgan Chase, and Morgan Stanley as its underwriters shows the gravity of this move. Insiders suggest that Shein's IPO could launch as early as 2024.

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Shein has never been without controversy

While the rise of this fashion brand for women has been impressive, it has not been without controversy. The company has faced criticism for several issues, particularly regarding its supply chain practices.

The women's fashion brand has faced many controversies (Image via the Shein website)

Additionally, a House committee investigating China raised alarms about Shein and Temu, another fast-fashion company, for potentially using products made with forced labor.

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Fashion label denies allegations

Why is Shein under fire? Fast-fashion brand and more drama explored (Image via the Shein website)

In response to these allegations, this fast-fashion brand has categorically denied using forced labor in its supply chain. The company maintains that its practices are ethical and compliant with international standards.

Despite these assurances, the scrutiny and investigations into the brand's operations continue, casting a shadow over its upcoming IPO.

As this women's clothing brand deals with the IPO process and addresses the controversies surrounding its business practices, the future of this fast-fashion giant remains a topic of keen interest.

The company's success will depend on how well it can grow while also being ethical and sustainable. However, even with these challenges, Shein remains a big player in the fast-fashion world.