Shein’s ultra-fast fashion empire has experienced a dramatic downturn following the collapse of its post-IPO valuation.
Headquartered in Singapore but outsourcing much of its manufacturing to China, the e-commerce platform failed to go public in London and New York due to concerns over its supply chain and heavy criticism of its environmental impact.
Consequently, Shein pivoted to the Hong Kong Stock Exchange, where it was valued at approximately $27 billion (€23.24 billion) on September 1. While this may appear to be a significant financial achievement, it is 70 per cent lower than its private market peak of nearly $100 billion (€86 billion) in 2022.
Why Did Shein’s IPO Fall Flat?
“Capital markets are not acting out of pure altruism; they are reacting to material financial risk,” says sustainability expert and founder of tech company E&S Solutions Ildiko Almasi Simsic, speaking to Euronews Earth.
“Shein’s delayed public listings and severely discounted valuation prove that investors now recognize ESG issues as direct threats to terminal value,” she adds.
Simsic argues that a business model exposed to multiple controversies, such as forced labour and hazardous chemicals in clothing, carries an “enormous risk profile”.
She notes that environmental and human rights issues have now crossed over from “ethics to equity,” signaling a watershed moment for the fast-fashion industry.
So, what makes Shein so controversial, and can its super cheap, on-trend garments ever become sustainable?
Shein’s Controversial Supply Chains
“For years, ultra-fast fashion grew by leveraging hyper-fragmented, outsourced supply chains that kept prices absurdly low while keeping liabilities at arm’s length,” Simsic tells Euronews Earth.
“But that model created a massive structural vulnerability. When a business relies on thousands of sub-contractors operating in grey regulatory zones, supply chain oversight isn’t just an operational headache—it becomes a central business risk.”
Shein’s supply chain has been shrouded in controversy since its inception. In 2022, an investigation by environmental NGO Greenpeace Germany found hazardous chemicals exceeding EU regulatory limits in seven out of 47 Shein products tested.
At the time, Shein acknowledged the chemical contamination and pledged “substantial improvements” to its chemical management.
However, a 2025 investigation found that little had changed. Greenpeace purchased 56 garments from Shein across eight countries and analyzed them for hazardous chemicals. They found that 18 of 56 (32 per cent) of the garments exceeded EU limits, including children’s clothing.
Among the chemicals detected were plasticizers, phthalates, and water- and dirt-repellent “forever chemicals” (PFAS). These hazardous chemicals have been linked to various health concerns, including cancer, reproductive disorders, growth disorders in children, and immunodeficiency disorders.
“Consumers are also at risk, as they can be exposed to these chemicals through several pathways—directly through the skin, by inhaling textile fibres in the air, and, in the case of small children, through mouthing contaminated clothes.”
In 2023, Shein admitted to finding two cases of child labour in its supply chain during the first nine months of the year.
The firm introduced new rules making any child labour or forced labour violations grounds for immediate contract termination.
“Both cases were resolved swiftly, with remediation steps including terminating contracts with underage employees, ensuring the payment of any outstanding wages, arranging medical checkups, and facilitating repatriation to parents or legal guardians as needed,” Shein said at the time.
“Following appropriate remediation, the contract manufacturers were permitted to resume business.”
Despite Shein’s clampdown on labour violations, concerns about poor working conditions remain widespread. A 2025 investigation by the BBC found that workers were sitting behind sewing machines for around 75 hours a week, contravening Chinese labour laws.
Many employers told the publication that workers only have one day off each month and must endure 12-hour shifts without breaks for lunch and dinner, often working until past 10pm.
A 2024 report by Swiss advocacy group Public Eye also found that excessive overtime remained common for many workers, despite Shein promising to improve conditions following previous probes.
Can Shein Ever Be Sustainable?
As Shein geared up for going public, scrutiny of its fast-fashion model intensified.
The company’s draft prospectus included the slogan “We believe in doing well by doing good.” However, according to Public Eye, this was removed from the final document.
Shein insists that “commitment to sustainable and responsible growth is woven into the fabric” of its business model. However, the expected IPO proceeds allocate just 10 per cent to sustainability and corporate responsibility.
An investigation by global nonprofit Rest of World found that between July and December 2021, Shein added anywhere between 2,000 and 10,000 SKUs (stock keeping units, or individual styles) to its app each day.
This is because Shein orders small batches of each garment, sometimes as few as a few dozen pieces, then waits to see how consumers respond. If a particular item sells well, Shein orders more.
“A model that floods the market with thousands of new daily styles at single-digit price points can only exist by passing its true costs onto labour and the environment,” Simsic says.
“Cheap prices are an illusion created by systemic outsourcing. When garments are produced at a fraction of a cent per stitch, it almost guarantees non-compliance with fair wages, excessive overtime, and cheap, fossil-fuel-derived synthetic fabrics.”
The expert acknowledges that while efficiency and tech-driven demand forecasting can reduce excess inventory, they cannot bypass the “physical limits of planetary resources or basic human rights.”
“Ultra-low cost and sustainability are fundamentally incompatible concepts,” she adds. “One inherently undermines the other.”
Can Fast Fashion Survive the Scrutiny?
Shein’s scrutiny has gone far beyond complaints from environmentalists and individuals. Earlier this week, France passed a law targeting companies known for selling large volumes of low-quality clothing at rock-bottom prices.
“The harmful effects of ultra-fast fashion on our environment and our economy are well known and documented,” says Mathieu Lefevre, the minister for ecological transition.
Under the bill, firms like Shein are assessed under two criteria: the volume of clothing placed on the market and the cost of repairing garments relative to their purchase price.
The per-item fee will vary on a set scale according to how each product scores on both standards. This year, companies will pay fines such as a 50-cent levy on underwear in the ultra-fast fashion category, rising to €2 for T-shirts, €9 for jeans, and €12 for a jacket.
The levy could reach up to €19.50 per item by 2030, though the cap remains at 50 per cent of the product’s pre-tax price.
Beijing has pushed back, urging France to abandon the law and describing it as “clearly discriminatory” due to Shein—and sites like Temu—being located in Asia.
“Should France persist in this course of action, China will take necessary measures to safeguard the legitimate rights and interests of Chinese enterprises,” says commerce ministry spokeswoman Huang Ling. “France will bear full responsibility for all consequences arising from this.”
Simsic argues that while fast-fashion giants will still be able to survive new laws like this, they are unlikely to reach their historical growth model.
“Historically, labour issues or toxic chemical findings were managed by public relations or board-level sustainability committees. Today, with legislation like the EU’s Corporate Sustainability Due Diligence Directive and Extended Producer Responsibility, these are strict legal compliance matters carrying fines of up to five per cent of global turnover.”
Simsic adds that if non-compliance directly threatens a company’s bottom line through hefty regulatory penalties and import bans, growth will inevitably slow. This means sites like Shein will have no choice but to internalise these costs by investing heavily in supply chain traceability and safer materials.
Euronews Earth has contacted Shein for comment.
