Shein Reportedly Under CAC Scrutiny, US IPO Faces Hurdle

Chinese fast-fashion giant Shein is reportedly facing cybersecurity scrutiny from the Cyberspace Administration of China (CAC) for its ways of managing and sharing information as the company attempts to obtain a green light from Beijing for its public listing in the US.

People familiar with the matter said the country’s top cybersecurity regulator is investigating how Shein handles data on its partners, supplies, and employees in China and whether it can prevent such information from being illegally distributed overseas.

CAC is also reportedly looking at the type of data the Singapore-based online retailer needs to present to the US watchdogs as it prepares for an initial public offering (IPO) in New York.

Shein and CAC were not immediately available for comment.

CAC Probe Into Shein Places Its US IPO At Risk

The news comes as Shein seeks Beijing’s approval to list publicly in the US, and the probe may introduce some hurdles to the company’s plans to sell its shares in the country.

CAC has spent months reviewing similar cases in the past, according to the report. Should the agency find any violations of its data handling practices, Shein may have to call off the IPO.

CAC’s authority has progressively become stronger under President Xi Jinping’s rule as his administration implements stricter measures in collecting data from Chinese tech firms as part of a larger initiative to help the country grow as a leader in big data.

Beijing has invested significantly in data and other digital infrastructure to transform electronic information into a key economic driver and aid in further validation of the Communist Party.

The move has led several Chinese companies to abandon plans to list outside their home country and obligated a few to exit the US capital market.

Didi Global Inc. departed from the New York Stock Exchange (NYSE) in May 2023 following the CAC’s year-long investigation into the Beijing-based ride-hailer, which began in July 2021.

TikTok’s parent, ByteDance Ltd., was also reported to have paused plans for an IPO after Chinese regulators instructed the company to fix the flaws with its data security.