The Chinese fast fashion company Shein Global Holdings Ltd. was once worth more than the parent companies of H&M and Zara, giving its reclusive boss Sky Xu a net worth of more than $23 billion.
But Xu’s fortunes have turned in four short years as Shein battles tariffs, political control and growing competition. Shein is scheduled to go public in Hong Kong on Tuesday for just over a quarter of the $100 billion it was worth in 2022. According to the Bloomberg Billionaires Index, Xu’s personal wealth, based on his 30 percent stake, drops to about $8 billion at the stock market price.
The decline in Xu’s fortune by more than $15 billion is also due to poor timing. Chinese consumer brands that went public in the last year or so initially attracted strong investor interest until a number of artificial intelligence companies debuted and stole corporate attention create new billionaires.
“They definitely missed the window,” Sam Wyatt, international equity portfolio manager at Melbourne-based U Ethical Investors, said of Shein’s IPO. E-commerce is now less attractive to investors than AI, he said.
Read more: Shein banks on Everlane acquisition to boost Empire after IPO
While some AI companies made huge gains on the first day, the overall performance of Hong Kong IPOs was mixed. Shares of beverage maker Eastroc Beverage Group Co. and pig farmer Muyuan Foods Co. are both trading below their listing prices after initial public offerings topped more than $1 billion. The founders of Mixue Group, a fast-growing bubble tea chain, have seen their wealth fall by more than a fifth since the company went public last year.
A Shein spokesman did not respond to a request for comment.
Xu, 43, founded Shein in 2012 with three partners. They had all worked at the same search marketing company and used their experience to build Shein into an online retailer known for affordable, trendy clothing. Business thrived during the Covid-19 pandemic as young shoppers arrived fueled a sales explosion.
The sales growth has slowed down Since then, according to data Shein announced in July ahead of its IPO. One of the company’s key strategies — evading U.S. and European import tariffs through small shipments — was upended by the Trump administration last year ended an important tariff exemption and the European Union announced a fixed tariff rate for small packages.
“The direction of the market is changing, not in Shein’s favor, especially in recent years,” said Sheng Lu, a professor of fashion and apparel studies at the University of Delaware. AI also creates a level playing field for Shein’s competitors, which can respond better and more quickly to changing consumer preferences, he said.
Shein tried to go public in its heyday, but had difficulty gaining a foothold in New York and London, where the company struggled Test about his work practices. The company’s supply chain is rooted in China but relies on the US and Europe as key markets. Executives distanced the brand from its Chinese origins and moved its global headquarters to Singapore, although they ultimately needed approval from Chinese regulators to go public.
“Shein was the hottest topic two to three years ago — a Chinese company that could have gone public in the U.S. because it already had a strong fast-fashion brand and high consumer recognition in the U.S.,” said Jason Hsu, chief investment officer at Rayliant Global Advisors. “But the hot topic now is AI.”