Is Shein really in recession?

Shein appears to be experiencing a setback. An analysis conducted by BoF on data provided by Earnest Analytics recently reported that the Chinese ultra fast fashion giant was valued at USD 66 billion, significantly less than the USD 100 billion last year. Although the brand has gained notoriety for its ultra-low prices and huge assortment of new designs every day, the company experienced a slowdown in sales in the summer and autumn of 2022, after years of explosive growth. 

However, according to the Wall Street Journal, Shein expects sales growth of 40% in 2023. The newspaper pointed out that the figures could be fallacious considering that Shein is currently under regulatory scrutiny by US regulators due to geopolitical tensions with China and that lower valuations could allow the company to recover its market value in the event of a stock market listing. The main investors in this round are Sequoia Capital, General Atlantic and Mubadala, the sovereign wealth fund of the United Arab Emirates.

Recently, the US Congress sent a letter to Shein and other international retailers asking about the compliance of their supply chains with US legislation banning the use of cotton from China's Xinjiang region. In addition, Shein faces growing competition from rival Temu, a shopping app developed by Chinese online marketplace Pinduoduo that offers similarly affordable prices and a wide range of products. Nevertheless, to consolidate its presence in the international market, the brand has recently opened new warehouses and production facilities in the US and Europe, and despite regulatory challenges and increasing competition, it remains optimistic about the future.