Plus: Deal of the day
IN TODAY’S EDITION
1️⃣ Why Shein might list in London |
2️⃣ Why North Korea has halted its dung balloons |
3️⃣ Deal of the day |
Hi Intriguer. Saturday Night Live skits don’t always hit. But sometimes, they hit so hard they’re censored in China for their unexpected spicy geopolitical content.
Take this recent one, for example, which took a shot at China’s e-commerce giant Shein and its fast fashion peers. Not only did the skit manage to throw shade at Shein’s controversial labour practices, it also managed to bring Jake Gyllenhall back from the cold after he was iced out by the Swifties post-All Too Well.
Laughs aside, today we dive into Shein’s upcoming IPO in London, which involves more intrigue than you might expect.
India’s early election results suggest tighter-than-expected Modi win.
The prime minister’s Bharatiya Janata Party (BJP) is still on track to be the biggest block in parliament, but if early results hold up, it might struggle to retain an outright majority. The news has sent shares in Adani Enterprises, a conglomerate headed by a close Modi ally, down 15% today (Tuesday).
Biden to unveil more border restrictions.
US President Joe Biden is expected to sign a new executive order today that would effectively halt asylum at the southern border if requests hit 2,500 in a day. The move seeks to neutralise migration as an election issue before November.
Toyota admits to cheating.
Japanese auto giant Toyota has apologised for cheating on a series of crash test and engine power certifications for seven models, halting production of three (the Corolla Fielder, Corolla Axio, and Yaris Cross). Japan’s transport ministry says rivals Honda, Mazda and Suzuki also cheated on some certifications.
Canadian YouTuber arrested on sedition charges in Trinidad.
Authorities arrested the content creator, who goes by ‘Chris Must List’, after he posted a video interviewing local gang members about their opposition to the government. He’s previously faced legal issues for his actions in Cuba and Somalia.
TOP STORY
China’s Shein to switch from New York to London IPO?
Shein, China’s fast-fashion colossus, is reportedly set to file for a London listing as soon as this week, though the timeline for the actual float isn’t yet clear. The brand, which gained popularity in recent years by selling hyper-cheap and hyper-trendy clothes online, is aiming to sell $1.3B in shares at a valuation of ~$64B.
Where’s the intrigue?
China-born Sky Xu co-founded Shein back in 2012. He started it as an e-commerce play for wedding dresses, before expanding into the wider world of womenswear and beyond. And after tripling its sales during Covid, Shein is now:
-
The largest e-commerce-only fashion retailer globally
-
The world’s most-downloaded fashion app, and
-
It generates $2B in profits by selling $45B in gear each year.
But here’s why Shein’s initial public offering (IPO) piqued our interest:
-
Shein initially wanted to list in the US
Shein filed early paperwork to list on the New York Stock Exchange last year, but it soon hit regulatory, political, and geopolitical hurdles: eg, concerns around its use of US user data, Xinjiang cotton tainted by forced labour claims, and an ongoing US-China tussle around US investor risk warnings on China.
Interestingly, Shein had – like TikTok and others – already relocated its HQ to Singapore in an effort to distance itself from Beijing. But US concerns lingered, regulator talks dragged on, and a top US retail lobby group even declined Shein’s membership (presumably in part due to Shein’s impact on US retailers).
So the firm started to look elsewhere, though without pulling out of New York.
-
IPOs by China-based firms are less frequent
We’ve seen fewer IPOs by China-based firms since 2021, for three main reasons:
First, IPOs are down everywhere, as international uncertainty curbs investor and investee expectations alike (though some markets are showing life this year).
Second, China’s cooling economy has tapped the IPO brakes further.
And third, Beijing’s regulators now also play a bigger IPO role, adding delays and a dash of unpredictability – just ask Didi (China’s Uber), which famously delisted in New York after copping a surprise probe by China’s cyber watchdog.
-
This could be London’s biggest-ever IPO
Finally, it’s been a rough ride lately for the London Stock Exchange, with record low IPO proceeds last year and a yawning valuation gap with New York. This all nudged a UK tech leader (Arm) to shift its listing to New York last year, and there’s talk of oil major Shell (London’s second-largest listing) following suit.
So London has moved to relax its listing rules to boost competitiveness. And of course, a record new listing from Shein could re-establish the City as a financial hub, while pumping cash back through its financial services sector.
So this is all why, in addition to cobalt, chips, and AI, you can now add that $14.95 Tie Dye Puff Sleeve Smock Dress to your list of things caught up in geopolitics.
INTRIGUE’S TAKE
One of the factors that makes this story so intriguing is its trade-offs:
-
Shein presumably expected a higher valuation in New York, but that’d also come with higher scrutiny
-
That scrutiny would likely involve pledges not to use Xinjiang cotton, but that’d just irritate Beijing, which insists Xinjiang cotton is fine
-
The last time London moved to trade away some rules to attract a big listing (Saudi Aramco), it copped flak and still lost the listing, and
-
It’s a reminder that while China’s consumer market gives it leverage to shape the world, US capital markets give the US leverage, too.
Also worth noting:
-
China allowed US regulators access to certain audit documents in 2022, helping avoid the US delisting of ~200 Chinese companies.
-
Despite being founded in China, Shein doesn’t sell there. This is due in part to the unique dynamics of China’s market, which make Shein’s business model less competitive in its home country.
-
France is currently mulling the world’s first ‘fast fashion bill’, with new taxes and a marketing ban on ultra-cheap apparel. Critics in China say it’s an attempt to protect Europe’s fashion sector from China’s Shein and Temu, who’ve pioneered ultra-flexible supply chains.
A MESSAGE FROM 1440
Join 1440 for FREE today and get unbiased daily news!
Be the smartest person in the room by reading 1440! Dive into 1440, where 3.5 million readers find their daily, fact-based news. We navigate through 100+ sources to deliver a comprehensive roundup from every corner of the internet – politics, global events, business, and culture, all in a quick, 5-minute read. It's free and devoid of bias or political influence, ensuring you get the facts.
MEANWHILE, ELSEWHERE…
-
🇰🇿 Kazakhstan: President Toqaev has announced Kazakhstan is removing the Taliban from its terrorist list in an effort to boost trade with Taliban-led Afghanistan. Toqaev is also pushing for a new UN office focused on development and stability across Central Asia.
-
🇫🇷 France: Someone left five coffins in front of the Eiffel Tower over the weekend, draped with the French flag and labelled “French soldiers of Ukraine”. French intelligence believes Russia was behind the stunt, to thwart France’s possible deployment of army instructors to Ukraine.
-
🇰🇷 South Korea: Seoul says it’s suspending a 2018 deal that eased tensions with North Korea, after the North sent it 900 trash and manure balloons last week. The South had vowed an “unbearable” response, before the North abruptly halted the balloons on Sunday.
-
🇸🇻 El Salvador: World leaders and the US homeland security chief were in El Salvador over the weekend as Nayib Bukele inaugurated his second term. He won 85% of the vote in February off the back of a dramatic drop in crime, which has also seen migration to the US plummet by 60%.
-
🇪🇬 Egypt: As is customary for a new presidential term, President Sisi has accepted his cabinet’s resignation and re-appointed Prime Minister Dr. Moustafa Madbouly to form a new government. Sisi wants the new government to focus on national security, services, and economic reform.
EXTRA INTRIGUE
🔍 Here’s what people around the world have been googling
-
🇦🇹 Austrian residents looked up ‘Brigitte Bierlein’, the country’s first female chancellor (2019-2020) who passed away yesterday.
-
Netizens in 🇭🇰 Hong Kong googled ‘June 4th’, today’s 35th anniversary of China’s deadly crackdown on the Tiananmen Square protests (June 4th vigils are now effectively banned in Hong Kong).
-
Folks in 🇲🇽 Mexico searched for ‘bolsa de valores’ (stock market) as the country’s stock exchange plunged 6.1%, following the ruling left-leaning party’s likely supermajority in Sunday’s elections. Friend and LatAm expert Mie Dahl has shared some insights with us on what’s next for Mexico’s first woman president.
DEAL OF THE DAY
Kylian Mbappe greets France’s first lady, president, and Qatar’s emir. Credits: Getty Images.
The world’s worst-kept secret is now official: French soccer superstar Kylian Mbappe has signed a $285M five-year deal with Spain’s Real Madrid. Where’s the intrigue? As his fame has grown, so has his value not only to France but also to Qatar, which owns the team he’s now leaving (Paris Saint-Germain). In fact, President Macron and Qatar’s Emir Al-Thani even intervened, trying to persuade Mbappe to stick around by inviting him to a state dinner in Paris earlier this year.
But we’re guessing not even an invitation to the Élysée can compete when you’re being offered a quarter of a billion dollars to join the team of your dreams.
DAILY POLL
Should the US have allowed Shein to list in New York? |
Yesterday’s poll: Do you think there's a US-China flashpoint on the horizon?
🟨🟨🟨🟨🟨⬜️ 🇹🇼 Yes, over Taiwan (35%)
🟨🟨🟨🟨⬜️⬜️ 🇵🇭 Yes, over the Philippines / South China Sea (25%)
🟩🟩🟩🟩🟩🟩 ⚡ No, it's just posturing (38%)
⬜️⬜️⬜️⬜️⬜️⬜️ ✍️ Other (write in!) (2%)
Your two cents:
-
🇵🇭 H.C: “The stakes are so high in Taiwan that both side will act with care. The South China Sea has a lower stakes, more actors, and conflicting agendas, so an accidental spark could flare brightly.”
-
🇹🇼 R.D: “2049 will be here before we know it.”
-
✍️ S.B: “It depends entirely on who wins the US elections in the fall.”
-
⚡ E.C: “And their posture is poor.”
-
✍️ A.A: “Why not both?"
Was this forwarded to you? We're a team of ex-diplomats producing a concise and engaging geopolitical briefing for 90k+ leaders each day. It’s free to subscribe.