The Cyberspace Administration of China (CAC), China’s internet regulator, has launched an investigation into Shein’s data management. This initiative risks greatly delaying the e-commerce giant’s planned entry into the New York Stock Exchange. Data transfer abroad at the heart of concerns…
The Cyberspace Administration of China (CAC), China’s internet regulator, has launched an investigation into Shein’s data management. This initiative risks greatly delaying the e-commerce giant’s planned entry into the New York Stock Exchange.
Data transfer abroad at the heart of Beijing’s concerns
In November, Shein filed to list in New York, tasking Goldman Sachs, JPMorgan Chase and Morgan Stanley to draft the offering. The Chinese authorities could put a spoke in the firm’s wheels, while the operation is destined to be among the largest IPOs in recent years.
According to exclusive information from Wall Street Journal, the CAC investigation, which plays a predominant role in Xi Jinping’s regime, focuses on the processing and protection of data held by Shein. Although the platform does not sell products in the Middle Kingdom, its activities are closely linked there. It sources from millions of Chinese suppliers, in addition to having created and invested in dozens of business entities in the country.
Beijing is particularly interested in the type of data that Shein plans to share with the American regulator in preparation for its IPO. In the context of an intensifying trade war with the United States, China is drastically strengthening its policy regarding the processing and transfer of data abroad.
Shein is not the first company to be targeted by such a CAC investigation. In the event of non-compliance with the regulations, the e-commerce platform is exposed to very heavy penalties.
Potentially catastrophic repercussions
In 2021, Beijing launched a similar investigation against Didi Chuxing, two days after it raised $4.4 billion in its IPO on the New York Stock Exchange. The firm did not wait for approval from the authorities. A year later, it was delisted from the American Stock Exchange and fined a hefty $1.2 billion. She was also banned from registering new users for many months.
Companies Full Truck Alliance and Kanzhun were also subject to such examinations. They nevertheless respected the regulator’s orders and awaited the conclusion of the investigation. Their shares are still listed in New York.
Shein’s schedule risks being disrupted by the CAC’s action, with its investigation potentially lasting around a year. For their part, the American authorities have not yet responded to its IPO request. The platform is targeting a valuation of $90 billion.
2024-01-17 12:37:00
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