On November 7, according to media reports, fast fashion giant Shein is preparing to go to the U.S. for an IPO, seeking a valuation target of up to $90 billion.。

Shein has told potential investors it is aiming for a $80 billion to $90 billion valuation through a listing, according to people familiar with the matter.。Timing of IPO still uncertain given market volatility。

The valuation Shein seeks is down from its peak。2022 is Shein's "peak year," the year Shein is considered by the market as the world's third most valuable startup, when the company in a round of financing, valued at $100 billion。

Since then, the company has faced increasing growth headwinds due to macroeconomic risks, increased competition and increased litigation, and its valuation in the non-public trading market has gradually declined.。Recently, the company was valued at about $50 billion to $60 billion, based on estimates of Shein's shares, which changed hands in the secondary market.。In the May round of funding, Shein was valued at $66 billion, both well below the $90 billion valuation the company sought.。

While the privately traded valuation does not necessarily reflect the company's actual valuation, it also reflects the company's growth "predicament" to some extent.。

Shein's "Dilemma" and "Broken"

Shein's business model is to use data analysis to predict customer demand and produce small batches of clothing to keep inventory costs low, thereby attracting consumers with low-priced fast fashion items。This model has helped it achieve great success。Before 2020, Shein had eight consecutive years of revenue growth of more than 100%, is a well-deserved "dark horse" in the capital market.。But in 2022, Shein's revenue recorded a year-over-year increase of 52.8% to $22.7 billion, a halving growth rate。Profits fell 36% year-on-year to just $700 million.。The drop in profits came as a surprise, with Shein executives attributing the drop to high air freight costs and rising production costs。

One of the main reasons for the slowdown in Shein's growth is increased competition in the industry。Although Shein is a Chinese company, its market is basically overseas。In the Southeast Asian market, there are Shopee, Lazada and other "old players" occupy most of the market share; in the North American market, there are also the main low-priced Temu "menacing," it is understood that in September Temu sales in the United States has been more than twice Shein's。The competitive pressure Shein faces is real.。In addition, consumer online shopping is no longer limited to shopping platforms, and the rapid rise of e-commerce tracks such as live streaming has also taken a lot of market share.。

Another major reason for the slowdown in Shein's growth is the impact from the macro economy。Several central banks around the world, led by the United States, have kept interest rates high, which has led to high borrowing costs for consumers。In this case, consumers are not just downgrading their spending, or even cutting spending outright。Fast fashion items such as clothes, shoes and bags are not necessities of life and are naturally part of many people's spending cuts。

Nevertheless, Shein has also been actively looking for ways to "break the game" from other aspects.。

On the one hand, Shein is actively diversifying its products through mergers and acquisitions.。In August, Shein acquired about a third of Sparc Group's shares.。Sparc Group owns Forever 21 through a joint venture。As part of the deal, Forever 21's products will be available to Shein's online customers.。In October, Shein acquired British online brand Missguided from Frasers Group, further expanding its range of third-party products.。

On the other hand, Shein is increasing the layout of overseas production bases.。In April this year, Shein announced that he would invest in Brazil in the next few years..500 million reais (about 1.$4.8 billion) to build a production network。This is its first production center outside of China, and Shein plans to localize 85% of its Brazilian sales through local production.。On Oct. 19, Fabiana Magalhaes, Shein's Brazilian production director, said the company plans to start shipping products it makes in Brazil to other markets in Latin America in 2026.。Not only in Brazil, Shein started production in Turkey this year and plans to build a factory in Mexico.。Shein hopes to transform its supply side from relying on China's domestic clothing supply chain in the past to setting up supply points in many places around the world.。