Shein, the Chinese fashion company known for its rock-bottom prices, has hired former Bear Stearns investment banker Donald Tang as executive vice chairman as part of its push for an international stock market listing.
The former banker and entertainment exec built a career helping bridge the gap between China and the U.S. but could face his biggest challenge yet with Shein. The online fashion retailer soared to a reported $100 billion valuation earlier this year but risks being caught in tensions between Beijing and Washington and faces scrutiny over claims of design theft, labor violations and the environmental impact of its trendy but low-cost garments.
Tang, who helped broker a stalled deal for China’s Citic to invest in Bear Stearns, and Dalian Wanda’s $2.6 billion takeover of movie-theater chain AMC, formally joined the company earlier this year. Forbes has learned that Tang has worked as advisor for Shein’s CEO and cofounder Chris Xu for over a year. He was first introduced to the company by Sequoia Capital China founding managing partner Neil Shen, a major Shein investor, who also reportedly backed an earlier Tang venture, a failed film distribution company.
Tang has joined Shein as part of a major push to make the fast-fashion business, which is on track to generate close to $24 billion in revenues this year, more appealing to international investors.
Shein’s app has become one of the most downloaded apps around the world thanks to myriad TikToks and Instagram posts sharing hauls of $2 bikinis, and other trendy low-cost garments, that have struck a chord with Gen-Z. Those same viral clips of Shein hauls have also prompted growing questions about the ethics of ultra-fast fashion, both for the environment and for the workers who manufacture it.
Shein has become a major rival to fast-fashion giants Inditex and H&M thanks not only to those videos but a data-led business model. The company pushes thousands of new designs a week based on small batch orders with only the most popular lines being moved into large-scale production. Consumer cues from its app and social media are harvested to help shape ordering and new clothing design.
Shein earlier this year hired two federal lobbyists and built out its U.S. headquarters in Washington. Another new hire, Adam Whinston, the company’s head of ESG, has been arguing that Shein’s asset-light take on retail is less damaging than that of traditional retailers, which have to manage dead stock and unsold inventory every season. The company has also launched a resale platform for used clothing after opening its first warehouses in the U.S. earlier this year.
The business has also made moves to reduce its footprint in China. Reuters reported earlier this year that Shein, which was founded by Xu and three cofounders in 2008 in Nanjing, eastern China, named a Singapore business as its holding company, and cofounder Xu had become a permanent resident in the city-state.
Still, the bulk of its supply chain lies in China’s manufacturing heartlands, where 90% of its suppliers are, even though Shein does not actually sell any clothes in the country. The company has moved to build up production in locations like Turkey and Brazil to reduce its reliance on China and cut transport costs to key markets in Europe and North America. But the majority of its 10,000-strong staff are still in China.
A stock market listing for Shein would mark the largest float since Chinese ride-hailing company Didi went public in 2021 with a $70 billion valuation. Didi delisted from the New York Stock Exchange just 11 months later after facing a series of probes from Chinese regulators as part of a major crackdown on the country’s tech sector, which ushered in new rules that make it harder for Chinese startups to list overseas.
According to Reuters, Shein plans to list in New York. Shein’s role as an exporter with a lighter footprint in China than other domestic tech giants could mean that it avoids the same scrutiny as an earlier generation of Chinese unicorns like Didi, Alibaba and Tencent. But China’s move to install President Xi Jinping for a third term earlier this month has further chilled investor interest in domestic tech companies.
“That regulatory blizzard has blown itself now, but that doesn’t mean that the Chinese government has reversed these regulations,” says George Magnus, a research associate at the China Center, Oxford University.
Shein would likely not face the same scrutiny from Beijing as would companies with access to Chinese consumer data like Tencent, or Didi, but American rules banning the import of cotton produced in Xinjiang could be a concern for investors, says Magnus.
Tang has found himself caught out by Beijing’s policy changes in the past. Tang pulled together an international consortium of investors to acquire Open Road Films, the production and distribution company behind Spotlight in 2017, with the goal of bringing more Hollywood movies to China, and Chinese hits to screens around the world.
Chinese regulators issued new rules just months later to curb “irrational” investments amid a boom in investment by Chinese companies like Dalian Wanda in Hollywood brands like AMC and Dune producer Legendary Entertainment.
Tang’s company Open Road Films filed for Chapter 11 bankruptcy in 2018. In August, Tang was dismissed from a lawsuit from Open Road creditors seeking to claw back money. In the same month, he was fined $5,000 by the Financial Industry Regulatory Authority for failing to disclose several investment properties he owned while working at his brokerage, Roselaine Securities.
Chinese Fast-Fashion Giant Shein Hires Former Bear Stearns Dealmaker Ahead Of IPO - Forbes
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