Shein has a financial problem, his capitalization is melting


There is no danger in the house, but Shein has to worry. The capitalization of the Chinese fast fashion giant has indeed been falling on the private markets for several months. After having reached its peak by exceeding 100 billion dollars last April during a fundraising, its level today would be between 65 and 85 billion dollars, according to the FinancialTimes.

However, it is not a tumble, and our colleagues recall that barely two years ago, the company was valued at 15 billion dollars. An anonymous source from the economic daily wants to be reassuring on the subject: “ They’ve been hit hard, just like pretty much every other e-commerce company in the world. I don’t think there is anything fundamentally wrong with the company…it was probably overvalued earlier this year. »

Shein retains competitive edge

But not everyone is of this opinion. A retail expert says companies like Shein are facing unprecedented headwinds. He thus points to the high inflation and the very low level of consumer confidence in the West. If we add to these factors, the rise in the price of raw materials and the cost of transport, this greatly weakens the sector, and the impact on margins should not be negligible.

The next few months will therefore be decisive for Shein. If it is still far too early to decide, we can still remember that the company has very strong assets against the competition. In a recent interview with us, Guoli Chen, professor of strategy at the European Institute of Business Administration (INSEAD), and expert on Chinese Tech giants, said:

Shein has a shorter production cycle, and the minimum quantity per batch is 100 pieces (or even less), compared to 500 pieces for Zara. This allows Shein to react more quickly to market demand and increase production if necessary. Besides working closely with its vendors, Shein’s other core competency is its digital capability. Shein is a high-tech company, not a traditional fashion company. She is simply applying her digital ability to the fast fashion sector.

But all is not rosy, and Shein also faces environmental criticism. In a documentary released this year, journalist Martin Weill mentioned in particular the fact that the company used polluting fibers and greatly exceeded the standards for harmful substances such as lead.

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