A Chinese internet regulator has initiated a cybersecurity review of Shein, cracking down on the fashion retailer’s data handling and sharing practices, as reported by the Wall Street Journal.
The scrutiny includes an examination of how Shein manages information related to its partners, suppliers, and staff within China. In addition, the Cyberspace Administration of China (CAC) is also investigating Shein’s ability to safeguard this data from unauthorized overseas access.
Moreover, there is interest in understanding the nature of Chinese data that Shein may disclose to U.S. regulators as the company seeks listing there, the report noted.
The review could potentially complicate Shein's plans to go public in the U.S., as the company is currently seeking approval from Beijing for its listing.
This development adds a layer of complexity to the fast fashion retailer's IPO aspirations, which have already faced political opposition in the United States.
Historically, investigations of this nature by the CAC have taken several months to conclude. A protracted review process could potentially lead to delays in Shein's stock sale.
In the most unfavorable scenario, the entire plan might be abandoned if the regulator identifies significant issues. The CAC, whose authority has significantly expanded under Chinese leader Xi Jinping, has impeded the overseas listing aspirations of numerous prominent Chinese technology firms.
Shein, which was reportedly valued at $66 billion after a funding round in May, filed its planned US initial public offering (IPO) with Chinese regulators in November.
By Vahid Karaahmetovic