The Wall Street Journal • 2:20 • intermediate • Business
Q1. What was Shein's initial choice for its IPO location?
6 words to learn — tap cards to flip and save favorites.
/ˌvæljuˈeɪʃən/
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Definition
The process of determining the current worth of an asset or a company.
Example
The company's valuation skyrocketed after the successful IPO.
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/ˈluːˌhoʊl/
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An ambiguity or inadequacy in the law or a set of rules that allows someone to avoid the intended meaning.
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The business exploited a loophole in the tax code to reduce its liabilities.
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/ˈtærɪft/
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To impose a tax or duty to be paid on a particular class of imports or exports.
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Many goods from abroad are tariffed to protect local industries.
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/ˌriːˈbrænd/
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To change the corporate image of an organization or product.
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The company decided to rebrand itself to attract a younger audience.
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/ˈkæpɪtl kənˈtroʊlz/
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Regulatory measures that a government uses to limit the flow of foreign capital in and out of the domestic economy.
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The government implemented capital controls to stabilize the economy.
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/ɪkˈsaɪtɪŋ/
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Causing great enthusiasm and eagerness.
Example
The launch of the new smartphone was one of the most exciting events of the year.
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If you haven't heard of Shein, there's a good chance that your teenage son or daughter has. That's because they're the Chinese fast fashion company that's been selling $3 t-shirts and $10 jeans to a lot of young Americans. And
after years of drama, [snorts] Shein finally made its debut today in Hong Kong. But that wasn't their first choice. That was New York. It wasn't even their second choice. That was London. When they finally debuted today, they did
so at a market valuation, which is about a quarter of what it was in 2022. So when Shein tried to list in New York in 2024, [music] there were two big problems. Number one was that a lot of
US lawmakers are saying, "Hey, Shein is a Chinese company and their products might contain cotton from [music] Xinjiang, which is a region Northwest China where US lawmakers say there could be forced labor." They didn't want cotton that was
uh harvested with forced labor coming to the US potentially. Number two is this trade loophole called the de minimis rule. That allowed goods worth less than $800 to go from China to the US without being tariffed. [music] And
the US has since closed that loophole, so there's a lot of questions about whether customers, especially teenagers, would [music] still pay uh for Shein products if they cost more. For years, Shein has tried to rebrand itself not as
a Chinese retailer, but as a global one. It moved its headquarters from China to Singapore. It bought a US company, Everlane. And also tried to move its supply chains out of China. But at the end of the day,
it turns out that Chinese supply chain is really what made it work. In its IPO prospectus, it said that [music] 90% of its supply chain was still in China. Besides Shein, there have been other big IPOs on the
Hong Kong market this year, including a pork producer that owns the biggest pig farm in China. But the real excitement is over electronics companies related to AI or robotics. These include suppliers to Nvidia and Apple, and also companies
that are making humanoid robots. There's two big reasons that are really driving these listings in Hong Kong. Number one is general excitement over the tech sector in in China. And number two, a lot of these Chinese companies are
doing secondary listings in Hong Kong. What are the advantages though? Well, there's a lot of capital controls in mainland China, so it's hard to move money in and out of China, number one. And number two, uh the US
dollar and the Hong Kong dollar are pegged to each other, so that gives some investors a little bit more stability. The Hong Kong market is really one to watch over the next few years. There's a lot of exciting
Chinese companies, whether they're leading-edge AI companies or robotics companies or even consumer companies that are going global. So, Hong Kong might be the birthplace of a lot of these international brands coming out of China.
