Investor.com" Jordan.
A few years ago, SHEIN, known as China's most mysterious giant, has recently become more and more aware of its business strategy and the background of its founder, Xu Yangtian, as its influence in the United States and the world has expanded, and the company's operational issues have also received in-depth attention and scrutiny from different angles.
Recently, there has been a lot of news about SHEIN's plan to go public in the United States. However, according to widely reported in China, SHEIN's plan to go public in the United States has not been approved by the relevant domestic authorities. What's even more concerning is that the company's valuation has shrunk significantly in a year. What is the reason for SHEIN's road to listing so tortuous? In addition, SHEIN has also fallen into the question of "de-sinicization", which has aroused widespread attention and speculation in the market.
The valuation of 100 billion has shrunk to $66 billion
Although Xu Yangtian, the founder of SHEIN, rarely appears in public, and SHEIN's clothes are mainly sold abroad, making domestic consumers relatively unfamiliar with this brand, the news about SHEIN and Xu Yangtian has attracted wide attention. So, what is the appeal of this company?
A set of data may show its strength. After the outbreak of the epidemic in 2020, fast fashion brands generally suffered a heavy blow. During the year, Zara's parent company, Inditex Group, launched the largest store closure plan in history, and its first-quarter financial report showed a net loss of 40.9 billion euros, or 4$3.2 billion. However, SHEIN, which focuses on online sales, has shown phenomenal growth momentum. Its annual revenue quickly doubled from $4.5 billion the previous year to nearly $10 billion, and its valuation soared to $15 billion.
With the continuous improvement of SHEIN's popularity, its business model and Xu Yangtian's background have also begun to be well-known to the public.
SHEIN is a cross-border B2C Internet company focusing on women's fast fashion, founded by Xu Yangtian in 2008. At present, it has successfully entered many markets such as North America, Europe, the Middle East, Southeast Asia, South America, etc., and directly serves consumers in more than 150 countries around the world. Its app is available in more than 50 languages worldwide and has 11 private labels.
As the founder of SHEIN, Xu Yangtian is a dynamic and creative post-80s generation. He graduated from Qingdao University of Science and Technology, the initial operation of wedding cross-border e-commerce, in 2012, he decisively gave up the wedding business, officially established Sheinside (the predecessor of SHEIN), and in 2014 acquired the cross-border ** brand ROMWE, to transform into a cross-border **. This transformation decision laid a solid foundation for SHEIN's subsequent development.
In recent years, SHEIN has grown into a unicorn in China's overseas markets. In 2021, it surpassed Amazon to become one of the most popular shopping apps in the United States. In 2022, SHEIN's GMV reached $29 billion, and revenue reached $22.7 billion, a year-on-year increase of 45%.
Excellent companies naturally attract the favor of capital. According to Guohai** statistics, from September 2013 to May 2023, SHEIN has experienced a total of 9 rounds of financing, and the financing rounds have gone from Series A all the way to Series G+. However, as the company's popularity grew, some issues in its business strategy began to attract attention.
First, in terms of valuation, the company's latest funding round has shrunk significantly. In April 2022, the company's Series F valuation was $100 billion, and by May 2023, that figure had shrunk to $66 billion.
Moreover, SHEIN has also been questioned about its actions in de-sinicization. Qilu One Point quoted Reuters as reporting that at the beginning of 2022, SHEIN moved its headquarters to Singapore, and the holding entity was Zhuotian Business Co, limited) became a Singapore-based company, Roadget Business Pte. And Xu Yangtian himself, in the "2023 Hurun Global Self-Made U40 Rich List" released in April 2023, shows that his country of residence is Singapore.
Since the second half of last year, SHEIN has actively launched a series of mergers and acquisitions around the world to expand the scale of its overseas assets. It has successively acquired one-third of the shares of SPARC Group, a leading British fashion retailer, and all its intellectual property rights.
There is a view in the market that behind SHEIN's frequent moves in the global investment market, in addition to alleviating competitive pressure and increasing valuation, it is more important to emphasize its identity label as a global brand through this series of mergers and acquisitions. With the rapid expansion of the company's scale, the controversy about its infringement and plagiarism has never stopped.
High-frequency new companies have been repeatedly caught in infringement lawsuits
Compared with traditional fast fashion brands and cross-border e-commerce peers, SHEIN has a strong first-chain advantage and has established a set of efficient small orders and quick return models. This model not only shortens the on-market cycle to only 7 days, but also compresses the inventory turnover to 40 days under the on-demand production strategy, demonstrating a set of strong operational efficiency and market responsiveness.
According to Guohai** statistics, SHEIN will launch a large number of new products every day. In the week from September 2 to September 7, 2023 alone, the average number of new products in Shein per day is as high as 2,725, of which 3,408 new products were launched on September 7, compared to only 45 new products in Zaful, which is also a fast fashion cross-border e-commerce, in the same period.
In addition to the fast launch speed and rich products, SHEIN has also shown obvious advantages in a number of popular categories. For example, the average price of SHEIN's tops is only $10, which is much lower than the US dollars of traditional fast fashion brands such as Forever21, H&M and Zara, and when the top 20 tops are selected for comparison, the lowest price of SHEIN is only 1$4, while Zaful's lowest price is $5.
However, with the increasing frequency of new products on SHEIN's products, the copyright risks it faces have gradually emerged.
On January 16 of this year, Uniqlo's parent company, Fast Retailing, publicly released a statement on its official website, claiming that Uniqlo had filed a lawsuit against SHEIN. UNIQLO accused SHEIN of violating the Anti-Unfair Competition Law of the People's Republic of China, and demanded that it immediately stop selling counterfeit UNIQLO round mini shoulder bag products and compensate UNIQLO for the losses caused thereby.
UNIQLO stressed that the counterfeit products sold by SHEIN have seriously damaged consumers' trust in the UNIQLO brand and the quality of its products, and Fast Retailing will take necessary measures, including legal proceedings, to protect its rights and interests.
Just a week later, SHEIN became a defendant again. According to information released by the California court, the American fashion brand for love & lemons sued SHEIN for infringement on January 22 and named SHEIN's companies as co-defendants.
In fact, this is not the first time SHEIN has been involved in copyright disputes. Previously, the company also cooperated with the well-known American brand Levi'S, Stussy, and Swedish fashion retailer H&M, among others, have had legal disputes. These controversies not only damaged SHEIN's public image, but also posed no small challenge to its future development. How to ensure the compliance of intellectual property rights while maintaining rapid innovation and product iteration has become an important issue that SHEIN needs to solve urgently. (Produced by Thinking Finance).