Shein approaches listing on the London Stock Exchange

Image source, Getty Images

Image caption Shein uses influencers, models and reality TV stars such as Love Islander Cally Jane Beech to promote the brandArticle information

• Author, Oliver Smith
• Role, Business Reporter, BBC News

• June 25, 2024

Chinese fast fashion company Shein has submitted initial documentation, bringing it closer to listing on the London Stock Exchange, the BBC has learned.

The online retail giant, which is based in Singapore but has extensive operations in China, recently submitted the confidential documents to UK regulators, according to sources close to the process.

Shein became one of the world’s biggest fashion retailers during the pandemic, but has faced criticism over the environmental impact of its business model.

The company has also come under fire for some of its labor practices, which include allegations of forced labor in its supply chain — something the company denies.

Both Shein and the UK regulator, the Financial Conduct Authority (FCA), declined to comment on a possible London listing, which could value the company at around £50 billion.

US warning to the UK

A company wishing to sell its shares in the UK must first apply to the FCA for approval of a prospectus containing detailed financial information.

Filing the documents is the first step in this process and moves the company closer to a UK listing – selling shares in the company on the London Stock Exchange – but does not necessarily mean it will end up being listed there.

In fact, it was initially thought that a US listing would be the most likely path for Shein after the company filed documents there late last year, but the move has been closely scrutinized by both Republican and Democratic politicians amid concerns about the company’s close ties. to China.

In early June, Marco Rubio, a top Republican on the US Senate Intelligence Committee and an ally of Donald Trump, wrote to UK Chancellor Jeremy Hunt, warning him of “grave ethical concerns” and the “deep ties of Shein with the People’s Republic of China”. .

“Slave labor, sweatshops and trade tricks are the dirty secrets behind SHEIN’s success,” Rubio wrote in his letter to Mr. Hunt.

“The UK has a historic tradition of abolitionism, from Wilberforce and Cowper to the Modern Slavery Act in our day. I trust that you will treat these allegations against SHEIN with the utmost seriousness, investigate them fully, and take appropriate action to protect investors,” he added.

A company spokesperson said: “SHEIN has a zero-tolerance policy for forced labor and we are committed to respecting human rights. We take visibility across our entire supply chain seriously and require that our contract manufacturers only buy cotton from approved regions.”

Image source, Getty Images

Image caption Arabella Chi is another Love Islander who promotes Shein

UK MPs have also expressed concerns, but the Labor Party’s shadow business secretary, Jonathan Reynolds, indicated on Monday that he would welcome Shein listing its shares in London, as it would open the company to closer scrutiny.

At a corporate election debate organized by Bloomberg, Reynolds said he met with company representatives.

“My view on any business of this type is that if they do business in the UK, the ideal would be to look at regulating them from the UK.

“The kind of expectations we would have, whether it’s around the job market, regulatory compliance or tax, are better realized if they are based in the UK.

“So if a listing were to be considered, I would want that because I would know that is how we can enforce the high standards that we would expect,” he added.

His debate opponent, Conservative Business Secretary Kemi Badenoch, said she was concerned about a possible listing but added: “That doesn’t mean we don’t want them.”

Admitting he had not yet met anyone from the company, Badenoch said one concern revolved around Shein’s business model of sending smaller packages directly to customers in the UK. Under customs rules, duties are not paid on goods below £135 and she said this could mean “a lot of loss in terms of tax” for the government.

Ms Badenoch also said she would “like to look into” allegations about forced labor.

“The city is regulated and we have regulators who do this. I’m talking specifically about this business and what we’d like to see.

“We don’t want a situation where the business secretary interferes with every listing… but those are my specific issues with Shein,” Badenoch said.

Some parts of the UK fashion sector have also urged caution. The British Fashion Council (BFC), which represents companies such as Burberry and Mulberry, said Shein’s stock market listing would be “a significant concern for UK fashion designers and retailers”.

“Fashion companies, including Shein, must adopt corporate due diligence in their supply chains. The BFC would encourage the UK government, the Financial Conduct Authority and the London Stock Exchange to ensure that any company listed in London is an active and responsible leader in this regard and is able to demonstrate addressing compliance concerns and sustainability in all areas, from workers to treatment, from materials sourcing to citizen engagement in disposable ways,” said Caroline Rush, chief executive of the BFC.

Despite the criticism, a potential Shein listing would be seen by many as a major boost for London, which has seen a number of high-profile companies leave the city and migrate to the US.

In an interview with the BBC last month, London Stock Exchange chief Julia Hoggett said the move would ensure the company became more transparent.

“Any company that wants to subject itself to the scrutiny of being in the public markets – this is the opportunity for them to raise the bar in the way they approach their corporate governance and the way they approach investors, and I think that’s very much the value that the public markets do,” she said.

Source