Chinese brand Shein, which was till recently the world’s largest online fashion retailer, now seems to be slipping from the eyes of investors. The company’s shares fell 6 percent on the first day of listing in Hong Kong on Tuesday. The company, which was once valued at $100 billion (Rs 9.5 lakh crore), has entered the stock market at only about one-fourth of the valuation. Nirgunan Tiruchelvam of Alethea Capital says Shein’s ‘speed-tech’ model is now outdated. The reason is clear – investors’ interest has shifted to AI companies. You can see that just before the listing of Shein, the shares of Chinese AI companies like Unity Robotics and CXMT had made a huge jump in Shanghai. There is one more problem, Sheen has also had to face the loss of tariff exemption in America and Europe. Due to this, its low-cost model has started weakening. Institutional investors also maintained distance this time. Only 20% of the shares offered pre-listing were bought, whereas in popular listings this figure is usually around 50%. “This is a fashion company that doesn’t seem fashionable to today’s investors,” says Weiheng Chen of Wilson Sunsini. According to a report by ‘China Labor Watch’, workers making clothes for Shein work without leave for 20 days and get only 7 to 28 cents (6.65 to 26.59 rupees) per item. It is common to work up to 100 hours a week, whereas in normal factories in China this limit is around 60 hours. However, Sheen has rejected these claims. Sheen’s troubles are not limited to the factory alone. The company is also losing those young customers who gave it momentum during the pandemic. According to Michael Gunther of research firm Consumer Edge, Shein’s market share is declining fastest among 18-34 year old consumers in the US. The major reasons for this are the increase in prices and concern about sustainability (eco-friendly products). Situation like Zoom; Growth slow in America, Britain, Europe Along with America, Sheen’s growth has also slowed down in Britain, while in Europe, due to the fees imposed on parcels, its share has declined the most in France and Spain. Since 2021, 58 cases have been filed against the company in America on allegations of design copying. Winston Ma, a former executive at China Investment Corporation, compares it to Zoom. This company, which was a superhit during the pandemic, has now become a thing of the past.
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Shock to fashion brand Sheen: Listing of Rs 9.5 lakh crore company at just 25% price; Reason- Investors are investing money in AI
