600 billion mysterious unicorns, the United States wants to review its relations with China
Author|Brother Mao
Source: Big Cat True Detective Agency
1
Recently, the U.S. House of Representatives sent a letter to fast fashion unicorn SHEIN.
The U.S. still has to review its relationship with China, of course, the main issue is related to data privacy, although SHEIN has said earlier that the relevant data is stored in Microsoft and Amazon's "data centers and cloud services located in the United States", but the United States is still not reluctant. ①
Why? Because SHEIN is going public.
In November, some media broke out that SHEIN had secretly submitted a form in the United States, preparing to be listed on the New York Stock Exchange in the United States, and would be able to trade as early as 2024.
If the listing is successful, SHEIN will become one of the "most valuable Chinese concept stocks".
What is the value? It can be said to be hot, but it can also be said to be on a roller coaster.
Tianyancha information (2) shows that in 2013, SHEIN received $5 million in financing from JAFCO Asia, and in 2015, SHEIN's valuation reached 1.5 billion yuan, and since then, SHEIN's valuation has been rising.
During the entire epidemic, it was the peak of SHEIN's development, with its valuation rising from $5 billion in 2019 to $100 billion in 2022.
What is the concept of valuation?
The world's non-listed unicorns, SHEIN is second only to Zhang Yiming's ByteDance and Elon Musk's SpaceX, in the fast fashion sector, more than H&M+ZARA combined, and second only to Tencent, Alibaba and Meituan in terms of market capitalization compared to Chinese Internet companies at the time.
However, by May 2023, SHEIN's valuation will only be $66 billion.
At the time of listing, the valuation expected by the media was more than 90 billion US dollars, which failed to catch up with the peak of 100 billion, but even so, this valuation is equivalent to more than 640 billion yuan.
After all, valuation is valuation, and the specific value may need to be calculated after the real listing, and the value that investors vote for with money is real.
However, it is still unknown whether it can be listed, because the contradiction is too great.
2
SHEIN is a mysterious unicorn.
Its biggest label is probably "China".
According to public information, the boss of SHEIN is Xu Yangtian, a post-80s generation born in Zibo, Shandong, who first appeared in the newspapers as Chris Xu, and later appeared on the official website of SHEIN under the name of Sky Xu (3).
SHEIN is his entrepreneurial project, the predecessor was established in 2008, originally made wedding dresses, the gross profit is very high, and the profits are also very considerable, but later, the single category of wedding dresses is still a bit thin, and SHEIN's cross-border e-commerce direction has become women's clothing, and it will run faster.
Because it's cheap.
SHEIN's main and main $10 a top, $5 a pair of shorts, the low-price strategy will never go out of style, especially now that overseas users are basically price-sensitive consumers, so SHEIN is in the downturn of the global market when bankruptcy and store closure have become the mainstream.
In the United States alone, it has already exceeded 30% of the market share, and the body of Americans is still very honest.
Bigger and stronger, in fact, it is not a big problem, but it is not easy to go public.
Chinese companies listing in the United States are facing investigations from both China and the United States.
According to the new regulations of the regulatory authorities at the beginning of 2023, domestic enterprises are subject to filing management when listing overseas, and enterprises need to submit various materials such as filing reports, legal opinions, data security risks, and shareholder information to the CSRC.
However, so far, there has been no relevant filing on the website of the China Securities Regulatory Commission, and the China Securities Regulatory Commission has also stated that it will give feedback on the issue of SHEIN's listing in the United States.
In the United States, the House of Representatives Energy and Commerce Committee and other institutions will also conduct investigations into Chinese companies that are planning to go public, which also includes the privacy data of this investigation.
3
In the face of double pressure, SHEIN "tears the label" by itself.
SHEIN positions itself as a global company, and the first step is to move its headquarters to Singapore, and the link to the main site of the shein.com has automatically jumped to the Singapore station.
TIANYANCHA'S INFORMATION SHOWS THAT NANJING LINGTIAN, THE FORMER FINANCING ENTITY OF SHEIN, HAS BEEN CANCELLED IN 2021 AND REPLACED BY ROADGET BUSINESS PTE, WHICH WAS REGISTERED IN SINGAPORE IN THE SAME YEAR. LTD。
THEN, ROADGET HAS BECOME THE CORE ENTERPRISE OF SHEIN: IT IS THE OPERATING COMPANY OF THE GLOBAL SHEIN APP, IT HAS ACQUIRED SHEIN'S TRADEMARK(4) AND BRAND ASSETS THROUGH TRANSFER, AND IT IS THE ACTUAL CONTROLLER OF SHEIN-RELATED COMPANIES IN CHINA.
In addition, the company that uses @shein.com email for registration information also has Guangzhou Hongyi, and the actual controller is wonderflow logistics, which is registered in the Hong Kong Special Administrative Region, and its subsidiaries are warehousing companies and supply chain companies associated with SHEIN.
Earlier, Xu Yangtian was also hidden in the list of equity relations and executives of related companies.
Among these companies, Xu Yangtian has either stepped down or the company has been deregistered, and Beijing Xishang, the only company that has not yet been deregistered, does not have any equity relationship with SHEIN.
Reuters has reported that Xu Yangtian has changed his nationality from China to Singapore, but at present, SHEIN is noncommittal, Forbes's rich list, it is still listed as Chinese, but can work in the headquarters, at least the right of abode in Singapore.
As the founder and CEO, Xu Yangtian, who is mostly known as Sky Xu, has not seen his true face in Lushan, and there is a saying that even SHEIN employees may not recognize him when they see him in the headquarters building.
SHEIN's "face role" was poached by SHEIN from SoftBank, and Son's former deputy Marcelo Crowle, who was promoted from the head of Latin America to the vice chairman of the group, responsible for SHEIN's global business.
SHEIN also moved very quickly, acquiring British brands, reaching long-term agreements with American brands, cooperating with Australian designers to produce, and the APP is not open to users in China, which can be said to be very global.
4
However, there is one label that may not be easy to tear off, and that is the Chinese supply chain.
What does fast fashion rely on?
In the past, ZARA's new products were updated twice a week, which was already quite fast, but SHEIN was faster, new every day, and ZARA used to have more than 20,000 new products every year, but SHEIN had more than 6,000 new products a week, and it could catch up with ZARA throughout the year in half a week.
How can we guarantee that? That is, to put the supply chain in China.
Before moving to Singapore, SHEIN's headquarters was Guangzhou, after all, Guangzhou's garment manufacturing industry is mature, cross-border e-commerce is developed, the foundation has been laid, and SHEIN's supply chain is within a radius of a few kilometers from the former headquarters.
Later, SHEIN's business expanded from clothing to small commodities, and it also opened the company to Yiwu, and the dividends were full.
However, this does not mean that SHEIN will always rely on Chinese manufacturing, and its supply chain has also shown signs of shifting.
There are several key nodes in SHEIN's "Global" territory, such as the United States, Brazil, Ireland and South China.
South China is where SHEIN started and the core of the supply chain, which is undoubted, while overseas, the United States dominates North America, Brazil dominates Latin America, and Ireland is the core of SHEIN's operations in the Middle East, Africa and Europe.
Among them, Brazil is one of the regions where SHEIN is deeply engaged in localization, and an important symbol of localization is to build an overseas "local supply chain", which is also the main thing that SHEIN's "face" Crow focuses on.
According to the information on its official website, SHEIN's expectations are:
By the end of 2026, 85% of sales will come from local manufacturers and suppliers, and Brazil will become a manufacturing and export hub for the whole of Latin America.
The realization of the localization of the Latin American supply chain means that the export to Latin America through SHEIN may be greatly discounted.
There are many related questions, and the answers can be given either by the securities regulatory commissions of China and the United States, or by the official documents or prospectuses of SHEIN.
Unless, SHEIN finally chooses not to go public.
Resources:
①、Chair of powerful House committee pushes Shein about data protections, China relationship（众议院委员会主席就数据保护和与中国关系向SHEIN施压），CNBC
②、天眼查APP：www.tianyancha.com
(3) SHEINGROUP official website: www.sheingroup.com
(4) Trademark Office of the State Intellectual Property Office, China Trademark Network: sbj.cnipa.gov.cn