Amid its initial public offering (IPO) bid, Shein, the Chinese fast-fashion company that is based in Singapore and valued at US$6.6 billion, was in the headlines for using a likeness of accused killer Luigi Mangione to sell a men's shirt.
What happened with the Shein IPO bid now?
The advertisement for "Men's new spring/summer short sleeve blue detsy floral white shirt" featured a model who looked like the incarcerated Mangione, who is accused of murdering United Healthcare CEO Brian Thompson on the street in Manhattan in December 2024. Some speculated that the image was generated by artificial intelligence (AI) because Mangione is in jail. He is facing both state and federal charges for Thompson's murder, according to People. Mangione has pled not guilty.
Shein spoke to media about this controversy:
"The image in question was provided by a third party vendor and was removed immediately upon discovery," according to an email reportedly sent to Newsweek...In a statement shared with Newsweek, Shein said that they have 'stringent' standards for the content uploaded on their platform and are conducting a review."
What is the Luigi Mangione controversy at Shein?
Despite his alleged crime, Mangione has become a celebrated personality among a certain group of people in the United States who see him as a symbol of anti-corporate and anti-greed sentiment. Others see him as a villain.
"Since his arrest, Mangione has received considerable public attention and has developed a controversial fan base, partly because of significant discontent with the health insurance industry and possibly also because of his striking looks," according to People.
Regardless, Mangione's image on Shein went viral on social media and set off a firestorm of comments. It put Shein in an awkward position. The company has been struggling with its IPO bids recently. More controversy swirling around it is not going to help.
Original controversies damaging Shein IPO bids
First, the company faced regulatory scrutiny when it was aiming for an IPO on the New York Stock Exchange (NYSE). As a result, it turned to an IPO on the London Stock Exchange (LSE). Although Shein is in more than 150 markets and has a workforce of more than 16,000 employees, the IPO in the LSE is reportedly at risk, too. Shein faces scrutiny for a number of alleged ethical lapses:
- Poor human rights conditions including forced labor in the supply chain.
- Intellectual property theft.
- Unable to remove ties to China, which has led to U.S. resistance, geopolitical tension and requisite Chinese regulatory approval.
- Financial challenges like the administration of U.S. President Donald Trump eliminating a tariff exemption that ensured platforms like Shein's could pay less for shipping to the United States.
- Pivoting from one IPO to another.
Now that the IPO at LSE is dragging on with more investigation, Shein is turning toward an IPO in Hong Kong. Originally, Shein was aiming to gain legitimacy with Western customers, by having an IPO in New York or London. However, this potential move to Hong Kong is sending a different message:
"Shein is considering moving its base back to China from Singapore in a bid to convince Beijing authorities to approve the e-commerce company’s Hong Kong initial public offering, according to a Bloomberg report on Tuesday. The report said that Shein had gone so far as to consult lawyers about setting up a parent company in mainland China, citing people familiar with the matter. However, it added that there was no guarantee that Shein would act upon the preliminary discussions."
Also, the Financial Times reported on the company's filing for an IPO in Hong Kong. The FT report explained what went wrong with the Western IPO bids:
"UK and Chinese regulators failed to agree on appropriate language to be used in the risk disclosure section of its prospectus. The differences related particularly to Shein’s supply chain exposure to the politically sensitive Xinjiang region, where China has been accused of human rights abuses against the indigenous Uyghur population. The UK’s Financial Conduct Authority approved a version of Shein’s prospectus earlier this year, but it was not accepted by the CSRC. In recent years, the Beijing-based regulator has become stricter on how companies describe the risks associated with operating businesses in China, according to the people."
The desire for an IPO can sometimes say something about the culture of an organization and its relationship with customers. In a previous article, CX Network explained how the IPO can impact what customers experience:
"In short, a public listing brings many more stakeholders to the table, which heightens the focus on financial performance and often overrides considerations around employees, culture and customer centricity."
While that might be worrisome, CX Network also shared some reasons that a customer-centric culture is good for shareholders:
"Metrics around customer acquisition, spending and churn all indicate how profitable, and therefore how valuable, a company is. The longer customers are retained, the higher an organization’s long-term profit potential increases. One strong example of this is Moonpig, which opened its 2024 annual report with the statement: 'At heart we are a technology platform, but our customers know us as the leading online destination for greeting cards, gifts and flowers.'"
Whatever happens, following Shein's quest for an IPO and legitimacy, while also staying on top of possible human rights violations, will remain relevant to the overall customer experience. After all, the culture, format and actions of a brand trickle down to the customer.
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