Shein to invest $271mln in UK, Europe ahead of potential IPO

Shein, which is preparing for a possible London listing, already sources some clothes from factories in Turkey, although the vast majority of its products are made by nearly 5,400 suppliers mainly in China

Fast fashion retailer Shein said it would invest €250 million ($271 million) over five years in the UK and Europe as the company battles criticism of its model based around flying cheap clothes and accessories from factories in China direct to shoppers worldwide.

Shein, which is preparing for a possible London listing, already sources some clothes from factories in Turkey, although the vast majority of its products are made by nearly 5,400 suppliers mainly in Guangzhou, China.

Textile associations and politicians in Europe have accused Shein of eroding local industries by flooding the market with garments at prices domestic factories and retailers cannot compete with, partly thanks to its use of a tax break for parcels worth less than €150 entering the EU. A similar tax break in the UK is for parcels worth less than £135 ($173).

The European Union is discussing abolishing the limit as part of a customs reform project proposed by the Commission in May 2023.

Shein said on Tuesday it has earmarked €50 million for "potential investments in R&D or pilot Shein production facilities in Europe or the UK," as well as initiatives to help brands and designers from the region reach a bigger market through Shein's marketplace.

Shein, known for its $5 tops and $10 dresses, reportedly recorded sales of nearly $45 billion in 2023 and was valued at $66 billion in a fundraising round in 2023.

Talking to Reuters, Shein executive chairman Donald Tang declined to give further details about where the firm was looking to start sourcing from.

The firm was "keeping options open" he said, but he noted the facilities would most likely be suppliers, as opposed to being owned and operated by Shein.

He said the share of Shein products made in Turkey is currently insignificant compared to China, but is growing fast.

Shein also said it would bring more UK and European artists and designers into its incubator programme.