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Shein to initiate plans for £50bn UK float
Image source, Getty Images
Image caption Shein uses influencers and reality TV stars like Natalia Zoppa to promote the brandArticle information
- Author, Peter Hoskins
- Function, business reporter
- June 3, 2024, 03:59 BST
Updated 37 minutes ago
Shein, the controversial fast fashion giant whose popularity has soared during Covid, could soon strengthen its ties to the UK with plans to sell shares in the business on the London Stock Exchange.
The Chinese company could submit the relevant documentation later this week, potentially valuing the company at $66 billion (£51.7 billion).
Shein’s formula of offering a huge variety of cheap clothes – supported by campaigns with social media influencers – has made it one of the biggest fashion retailers in the world.
But it has faced severe criticism over its environmental practices, as well as allegations about the use of forced labor in its supply chain.
A spokesperson for Shein declined to comment.
The platform is expected to launch in the UK and Germany at a later date, although no date has been specified.
The company is looking to the UK as a place to sell its shares after facing obstacles and intense scrutiny in the US. Shein filed documents in the US last November.
Some US lawmakers have raised concerns about Shein’s ties to China as tensions between Washington and Beijing intensify.
Shein has thousands of third-party suppliers, as well as third-party manufacturers, near its headquarters in Guangzhou, China.
It is able to deliver a new item in a matter of weeks, having accelerated the “test and repeat” model first used by companies such as Zara owner Inditex, where companies place small orders for garments, see how they behave with buyers before asking for more if they are a success.
‘Great news…but not without controversy’
If Shein chose the UK over the US, it would be a significant boost for the city of London.
UK share listings generate significant business for the wider financial services sector, which still represents more than 10% of the entire UK economy.
Shein may choose to submit initial documentation – known as a prospectus – to the Financial Conduct Authority this week, sources said, or it could happen at the end of June.
Submitting a prospectus to the FCA is a mandatory first step for any company wishing to sell shares on the London Stock Exchange.
“This could be big news for the London stock market,” Colleen McHugh, chief investment officer at Wealthify, the investment firm, told the BBC’s Today programme.
But she admitted the company may face some difficulties regarding allegations about how it conducts its business.
Registration with the financial supervisory body is a necessary first step, but it does not guarantee that the float will go ahead.
“We have zero tolerance for forced labor,” Shein told the BBC at the time.
The investigation by Swiss advocacy group Public Eye found that several employees at six locations in the industrial hub of Guangzhou were working excessive overtime.
According to the group, which interviewed 13 employees from six factories in China that supply Shein, excessive overtime was common for many workers.
Shein told the BBC that he was “working hard” to address the issues raised by the Public Eye report and that he had made “significant progress in improving conditions”.
Regarding a London listing, McHugh said: “It will be up to the regulator to decide whether or not the listing can proceed here. [in the UK] – but it won’t be without controversy.”
Shein’s executive chairman, Donald Tang, is an American citizen who was a former Bear Stearns banker in Asia.
He has met with Chancellor Jeremy Hunt and Jonathan Reynolds, the shadow business secretary, in recent months to discuss the possibility of a float in London, after encountering resistance from regulators and lawmakers in the US.
A Labor Party spokesperson said it had met with a number of companies, including Shein, “who intend to invest or list in Britain”.
“We expect the highest regulatory standards and business practices from any company operating in the UK. We believe the best way to ensure this is to have more companies operating and regulated under UK law,” the spokesperson added.
Her Majesty’s Treasury declined to comment.