Unlock the Editor’s Digest for free
Roula Khalaf, editor of the FT, selects her favorite stories in this weekly newsletter.
Online fast-fashion retailer Shein is trying to hide comments from its chairman claiming it is essentially an ‘American company’ as the group’s attempts to distance itself from its Chinese roots threaten to block approval for an IPO in the West derail.
In a speech at the Milken Institute conference in Los Angeles last month, executive chairman Donald Tang claimed that its corporate values meant Shein could be considered an American company, reigniting the debate over its origins and encouraging employees to to try to suppress reports of his comments. received attention in China.
The inconsistent reporting on “where Shein comes from” is important because Beijing has yet to formally greenlight the group’s application to list outside China, despite Shein filing materials with the China Securities Regulatory Commission last November .
A person briefed on the matter said Shein’s moves to distance itself from China had emerged during government consultations on its application for an overseas listing.
Approving the IPO would be tantamount to unofficially endorsing founder Xu Yangtian’s model of “de-Chinafying” to achieve business success, the person said. “It raises questions about loyalty to China that some in Beijing find uncomfortable,” the person added.
They added that it was still likely that Shein would eventually receive approval to sell shares abroad. The need for a Chinese signature indicates that Shein, at least in Beijing’s eyes, remains Chinese.
The company was founded in 2008 in the eastern city of Nanjing by Xu, who also goes by the name Sky Xu. The 40-year-old was born in Zibo city in eastern Shandong province. In late 2021, Xu moved the company’s headquarters to Singapore and also moved his residency status to the city-state. It is unclear whether Xu still has a Chinese passport.
Shein’s “Singapore wash,” as the practice has become known among Chinese groups moving their headquarters, has also failed to calm lawmakers in the US, its largest market. China hawk Marco Rubio sent a letter to the British government on Monday urging it to proceed cautiously in allowing Shein’s IPO in London. He said the group should be “properly understood as a Chinese company.”
Two Chinese business columnists told the Financial Times that Shein had pressured them not to write about Tang’s speech, fearing it could cause “misinterpretation.” Shein staff told them the speech had irritated some officials, they said.
“If we spread the word, there will be more public discussions on the issue,” said one of the columnists. “Shein doesn’t want this to happen.”
“Why did Tang have to say that Shein is an American company?” asked the second columnist contacted by the company. “He could have simply said that Shein is a multinational company with relevant business functions inside and outside China.”
Tang made the comments on stage, but the Milken Institute has now removed a video of Tang’s May 7 panel from its website and from its official channel on Vimeo. Archived versions of Milken’s website show that the video was available until at least the end of May.
The Milken Institute did not respond to repeated requests for comment. Several Chinese online media sites have removed posts that prominently aired Tang’s claim that Shein was “an American company”, a common occurrence in China when companies object to content written about them.
When asked by Milken Institute Asia colleague Curtis Chin what kind of company Shein was, Tang said “identity” was a difficult question. He said Shein was born in China, with many employees and a significant part of its supply chain still there, so it can be considered Chinese, but its headquarters and foundation also make it Singaporean.
Then Tang noted that its largest market was the US and that American values had made it successful. “It’s about innovation, it’s about the freedom to express individuality, it’s about fair play, fair competition, the rule of law, all these things that we stand for are exactly what the American ethos is,” he said.
“So if you look at it that way, we are an American company.”
Shein did not immediately respond to a request for comment.
Eleanor Olcott, Tina Hu and Nian Liu reported from Beijing