Shein is approaching one of the most important moments in its history. After unsuccessful attempts to list in New York and London, the online fashion retailer is preparing for a potential initial public offering in Hong Kong as early as September or October 2026.
However, the company will enter the public markets under significantly different conditions from those that powered its rapid international expansion.
New European customs duties, slower growth, increasing regulatory scrutiny and rising fulfilment costs are placing pressure on Shein’s low-price cross-border e-commerce model. These challenges could force the company to accept a valuation far below the $100 billion figure it reportedly achieved during a private funding round in 2022.
Shein is now expected to seek a valuation of approximately $40 billion to $50 billion, although some investors reportedly believe a figure closer to $30 billion may be more realistic.
Shein received approval from the China Securities Regulatory Commission for its planned Hong Kong IPO in July 2026, clearing one of the most significant obstacles facing the listing.
The company could reportedly sell up to 8% of its shares through the transaction. Its proposed listing would be one of the most prominent retail IPOs in recent years, particularly at a time when weaker consumer spending has caused many brands to postpone their public-market plans.
A Hong Kong listing represents the latest chapter in a lengthy and complicated IPO process.
Shein confidentially filed for a US listing in 2023 but encountered resistance connected to its supply chain, labour practices and links to China. It subsequently turned to London, where its proposed flotation also became delayed amid regulatory and political scrutiny.
The company then redirected its efforts towards Hong Kong, where it has now secured approval from Chinese regulators.
Despite clearing this regulatory hurdle, Shein must still convince investors that its growth model can remain profitable as some of its most important markets introduce stricter rules for low-value e-commerce imports.
Europe is particularly important to Shein’s IPO story because the region reportedly accounts for approximately one-third of the company’s global revenue.
Shein generated more than $40 billion in revenue and around $2 billion in net profit in 2025, according to figures reported by Reuters. Nevertheless, slower growth and new trade costs are creating uncertainty around its future earnings.
Shein’s success has traditionally been based on offering an enormous selection of low-priced fashion products, adding new items rapidly and shipping many orders directly from suppliers in China to consumers.
This model enabled the company to respond quickly to changing demand while avoiding the costs associated with maintaining large inventories in local markets.
The same operating structure, however, leaves Shein highly exposed to changes affecting low-value imported parcels.
On 1 July 2026, the European Union introduced a temporary €3 customs duty on low-value imports worth up to €150 that are sent directly to consumers from outside the EU.
The duty applies per item category, identified through its customs classification, rather than simply as a single charge on every parcel. A shipment containing products covered by several customs codes could therefore face multiple €3 duties. The temporary arrangement is expected to remain in place until 1 July 2028, when the EU’s wider customs reform is scheduled to introduce a new system for low-value imports.
This distinction is especially relevant for marketplaces selling mixed baskets of inexpensive products.
For example, a parcel containing a dress, fashion accessory and pair of shoes could contain several different customs classifications. The total duty applied to the shipment may consequently exceed €3.
For premium retailers, an additional charge of a few euros may have a relatively limited effect on consumer demand. For Shein, where many individual products cost less than €10, the impact can be much more significant.
The duty could increase the final price of an order, reduce the attractiveness of small purchases or force Shein to absorb part of the additional cost. Each option creates pressure on either demand or profit margins.
Shein’s European value proposition depends heavily on affordability. Its customers are often highly price-sensitive and attracted by the ability to purchase several fashion items at prices below those offered by conventional retailers.
A fixed customs charge therefore represents a disproportionately large percentage of the price of many Shein products.
A €3 duty applied to an item costing €6 is equivalent to 50% of the product’s original price. Even when several products are combined in one shipment, multiple customs classifications could materially increase the total landed cost.
This presents Shein with several difficult options:
Each response would move Shein further away from the highly flexible direct-from-China model that initially supported its international expansion.
Shein has already begun adapting its European supply chain.
The company has expanded its logistics operations in Poland, establishing a regional fulfilment centre capable of supporting deliveries across European markets. The facility can also be used by external sellers operating through Shein’s marketplace.
Local warehousing allows products to be imported into the EU in larger commercial shipments rather than sent individually to consumers. Once customs procedures are completed, orders can be fulfilled from within the single market.
This approach can provide several advantages:
However, maintaining local inventory also introduces new costs and operational risks.
Shein may need to forecast demand earlier, hold more stock, lease additional warehouse capacity and manage unsold products. These requirements could weaken one of the central advantages of its original model: producing relatively small quantities and rapidly replenishing only the products that sell well.
Shein has gradually expanded beyond its role as a first-party fashion retailer by allowing external merchants to sell products through its platform.
The EU customs changes could accelerate this transformation.
A marketplace with more European sellers would allow Shein to offer products already located inside the EU. These items would not face the same direct-import duty when delivered to European consumers.
Shein could also generate more revenue from seller commissions, advertising, payments and fulfilment services. This would make its business model more similar to established online marketplaces.
However, increasing the number of third-party sellers introduces additional regulatory responsibilities. Shein must ensure that products offered through its platform comply with European safety, consumer-protection and digital-platform rules.
A larger marketplace could therefore help Shein reduce its customs exposure while simultaneously increasing its compliance obligations.
The €3 duty is only one element of Shein’s increasingly difficult European environment.
The European Commission has been examining the company under the Digital Services Act, which places significant responsibilities on very large online platforms.
These obligations include assessing systemic risks, removing illegal products, improving seller traceability, protecting minors and providing greater transparency around recommendation systems and advertising.
Shein has also faced scrutiny over product safety, environmental claims, addictive platform design, labour conditions and the sale of potentially illegal goods by external merchants.
These issues matter to prospective investors because regulatory investigations can lead to fines, operational restrictions, additional compliance costs and reputational damage.
They also complicate Shein’s efforts to present itself as a mature global technology and retail company rather than simply a low-cost cross-border seller.
Shein’s European challenges follow similar changes in the United States.
The company’s model benefited for years from the US de minimis exemption, which allowed qualifying low-value goods to enter the country without normal customs duties. Changes to that treatment placed additional pressure on Shein’s American operations and contributed to uncertainty around its valuation.
The EU has now moved in the same direction.
Together, these developments suggest that the regulatory environment that enabled the explosive growth of direct-from-China e-commerce is coming to an end.
Governments are increasingly concerned about the enormous volume of low-value parcels entering their markets, the cost of customs enforcement, unfair competition for domestic retailers and the difficulty of checking every product for safety and compliance.
For Shein, this means the challenge is not limited to one temporary European duty. The company must demonstrate that it can remain competitive under a permanently more demanding global trade environment.
The difference between Shein’s previous and expected valuations illustrates how investor sentiment has changed.
The company was reportedly valued at approximately $100 billion in 2022, placing it among the world’s most valuable privately held businesses. Its valuation subsequently fell to around $66 billion during a 2023 funding round.
Shein may now seek a Hong Kong IPO valuation of between $40 billion and $50 billion. Some shareholders and potential investors have reportedly argued that the company could be worth closer to $30 billion.
Even at the higher end of the expected range, Shein would be worth less than half its reported 2022 peak.
The reduction does not necessarily mean that Shein’s business is failing. The company remains one of the world’s largest online fashion retailers and continues to generate substantial revenue and profit.
Instead, the falling valuation reflects a reassessment of its future growth, regulatory exposure, logistics costs and long-term margins.
Shein’s preparations for the IPO are also taking place alongside a significant leadership transition.
Executive chairman Donald Tang is expected to leave his position as the listing approaches completion, although he may remain involved as a senior adviser. Founder and CEO Sky Xu is expected to take over as chairman and lead the company’s investor presentations.
Tang had acted as one of Shein’s most visible representatives when dealing with Western regulators, politicians and investors. His departure places greater responsibility on Xu, who has traditionally maintained a lower public profile.
For potential shareholders, the transition raises questions about corporate governance and how Shein will manage its relationships with regulators outside China.
The company must not only explain its financial performance but also demonstrate that it has the leadership structure and compliance systems required of a major publicly listed business.
Shein’s IPO presentation will need to answer several important questions.
The first is whether the company can continue growing after customs exemptions are removed in major markets.
Investors will also want to understand how much of the new import cost Shein intends to absorb and how much will be passed on to customers.
Another key issue will be the profitability of European fulfilment. Local warehouses may improve delivery speeds and reduce dependence on individual imports, but they also require greater capital investment and more sophisticated inventory management.
Shein will additionally need to explain whether it intends to remain primarily a fashion retailer or develop into a broader marketplace and logistics platform.
Finally, investors will assess whether the company’s regulatory and reputational risks have been adequately reflected in its proposed valuation.
The outcome of Shein’s listing will have implications beyond the company itself.
If Shein successfully adapts to the EU’s customs system, it could provide a blueprint for other Asian marketplaces seeking to maintain access to European consumers.
The likely model would involve a combination of:
Temu, AliExpress and other cross-border platforms are confronting many of the same pressures. European retailers and logistics providers should therefore expect more competition for local warehouse capacity, fulfilment partnerships and last-mile delivery services.
The customs reforms could also create opportunities for European brands that previously struggled to compete with ultra-low-priced imports.
However, local warehousing alone will not eliminate the competitive advantages enjoyed by large global marketplaces. Their technology, scale, marketing reach and supplier networks will remain formidable.
Shein’s planned Hong Kong IPO is becoming a test of whether the company can successfully move beyond the regulatory conditions that supported its original growth.
The retailer has already shown that it can build a global brand, use data to identify consumer demand and coordinate an enormous network of suppliers.
Its next challenge is more complex.
Shein must prove that it can maintain affordable prices while paying higher import costs, investing in local logistics, meeting stricter European regulations and providing investors with more transparency.
The EU’s €3 customs duty will not determine Shein’s future on its own. Nevertheless, it represents a wider structural change in cross-border e-commerce.
The era in which millions of ultra-low-value parcels could move directly from China to European consumers with minimal customs duties is ending.
Shein’s valuation, IPO performance and European strategy will show whether one of the biggest beneficiaries of that system can also succeed in the market that replaces it.
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