The valuation of China's cross-border e-commerce unicorn SHEIN is already twice the market value of Uniqlo?

Reporter | Chen Qirui

Edit | Lou Shuqin

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According to Bloomberg, Chinese overseas fast fashion brand SHEIN is seeking a new round of $1 billion in financing.

Sources said SHEIN is in contact with institutions such as the Transatlantic Investment Group. If successfully financed, SHEIN could be pushed to $100 billion, double the current market capitalization of UNIQLO's parent company Fast Retailing Group, and higher than the market capitalization of ZARA's parent companies, Inditex Group and H&M Group combined.

Currently China's unlisted $100 billion valuation companies include ByteDance and Ant Financial. Multiple independent sources told 36Kr that another investment institution in addition to the Transatlantic Investment Group was willing to bid $700 million. As the transaction is still in progress, future valuations are subject to change.

Interface Fashion asked SHEIN for confirmation on the matter of seeking financing. SHEIN said: "No comment on market rumors. ”

This isn't the first time SHEIN has gotten word of seeking financing.

In June 2021, SHEIN responded to Bloomberg reports by denying any recent funding. According to the interface fashion combing, as of September 2020, SHEIN has completed 5 rounds of financing, and the investors include star investment companies such as Sequoia Capital, IDG Capital, and Shunwei Capital.

Along with this comes the rumor that SHEIN is seeking to go public in the United States.

The news first came out in the first half of 2020. In January 2022, Reuters quoted sources as saying that SHEIN was considering restarting its listing plan in the United States and had communicated with Bank of America, Goldman Sachs and JPMorgan Chase and other institutions on the listing plan.

Reuters reported that SHEIN founder Xu Yangtian may choose to accelerate the listing process by obtaining Singapore citizenship. The report also pointed out that SHEIN's sales revenue in 2021 is about 15.7 billion US dollars (about 99.3 billion yuan). For comparison, ZARA's parent company, the Inditex Group, will have revenues of 27.7 billion euros (about 192 billion yuan) in 2021.

According to tianyancha public information, SHEIN's operating entity in China, Nanjing Lingtian Information Technology Co., Ltd., has been deregistered in April 2021, and Xu Yangtian no longer serves as any domestic corporate legal person. SHEIN is also ramping up recruitment for its singapore-based staff.

SHEIN previously replied that Xu Yangtian is still a Chinese citizen; the increase in recruitment of Singapore companies is caused by SHEIN's positioning in global development, while denying rumors of seeking to go public in the United States again.

In the two years since the outbreak of the new crown epidemic, shein has expanded faster and faster.

After its success in North America, Europe and the Middle East, SHEIN is gaining strength in southeast Asia and South America. According to Marketing Inactive, SHEIN intends to set up a regional hub in Singapore, with Singapore and Malaysia as a stepping stone to open up the Southeast Asian market.

In South America, SHEIN uses Brazil as its foothold. According to financial advisory firm BTG Pactual, SHEIN's sales in Brazil have exceeded 2 billion reais (about 2.7 billion yuan). Local media outlet Neofoeed said that Xu Yangtian met with some Brazilian clothing retailers at the end of 2021 and is currently evaluating the construction of factories in Brazil.

As a cross-border e-commerce company, SHEIN completes most of its apparel production in Guangdong. Thanks to a well-polished intelligent production system and a large and mature local garment industry, SHEIN is able to produce garments in small batches quickly and in line with trends.

This production model, called "small single fast return", has been used by fast fashion brands such as Zara before. But SHEIN goes a step further. Interface Fashion has reported that the production cycle of SHEIN's core fast fashion category is 5 to 7 days, and if it encounters a blockbuster, it can be delivered within 3 to 5 days at the earliest.

With fast updates, low prices, and smart big data, SHEIN is able to capture consumer preferences and consolidate its loyalty. In order to cope with the increasing market size, SHEIN plans to build the Greater Bay Area Supply Chain Headquarters in Zhongxin Town, Zengcheng District, Guangzhou, covering an area of about 3,000 mu and a total construction area of 3.3 million square meters.

It is worth mentioning that the epidemic has already caused setbacks in the global apparel production supply chain, and fast fashion brands such as ZARA and H&M have recently announced price increases due to rising production and transportation costs. Although China's apparel production system is perfect, from the perspective of recent performance, the impact of the new round of the epidemic on garment manufacturers is emerging.

SHEIN, with its advantage of low price and high efficiency, must also face similar problems.

And it is not difficult to see from the trajectory of the transformation of brands such as Zara and H&M that there is no end to the competition for low prices and efficiency. When the technology matures, there will inevitably be more efficient new players to compete for the market. In response, both Inditex Group and H&M Group have recently tried to sell medium-priced products to consumers. SHEIN is also trying to build a brand image beyond "cheap" by hosting designer grand prixes and expanding product categories.