Commentary: Shein’s IPO has only one winner

Shein's IPO, priced at HK$48.56 per share last week, valued the Singapore-based online retailer at just over US$26 billion. This is a quarter of the company's private-market peak four years ago, about US$100 billion. While existing shareholders receive a payout of up to US$3.5 billion, they are unlikely to be winners. The real beneficiaries are the network of suppliers in southern China that powers Shein's ultra-fast-fashion model.

The close-knit, tightly integrated supply chain allows the company to identify trends, place initial orders, and have products ready for delivery within two weeks. This manufacturing network, once downplayed by Shein, now appears to be its greatest strength. The IPO will likely further bind suppliers to Shein, as the company plans to invest 40 percent of proceeds into improving the manufacturing network.

However, the subdued response to the IPO suggests investors remain skeptical about Shein's growth prospects. With growth in the US and Europe slowing due to protectionism and competition, Shein plans to expand by acquiring labels and integrating them into its manufacturing network. However, finding the right acquisition targets that match its production model may prove challenging.