Shein, the controversial Chinese fast fashion giant that saw a surge in popularity during the Covid-19 pandemic, is considering tightening its ties with the UK by planning to list its shares on the London Stock Exchange.
The move could potentially value the company at $66 billion (£51.7 billion), making it one of the largest public offerings in recent years.
Shein’s strategic shift from US to UK
The decision to look at the United Kingdom as a potential market for its initial public offering (IPO) comes after Shein faced significant hurdles and scrutiny in the United States.
The company had filed documents in the US last November but encountered resistance from US lawmakers concerned about its Chinese links amidst growing tensions between Washington and Beijing.
Shein relies on a vast network of third-party suppliers and contract manufacturers near its headquarters in Guangzhou, China.
The company has perfected a rapid production model, allowing it to introduce new items in a matter of weeks, a strategy that has contributed significantly to its success.
Environmental and ethical controversies around Shein
Despite its commercial success, Shein has faced severe criticism regarding its environmental practices and labor conditions.
Allegations of forced labor, particularly involving Uyghur workers, have plagued the company.
Last year, a group of US lawmakers called for an investigation into Shein over these claims. Shein has denied any involvement in forced labor, maintaining a stance of “zero tolerance” towards such practices.
In May, a report by Swiss advocacy group Public Eye suggested that workers for some of Shein’s suppliers were working up to 75 hours a week, contradicting the company’s promises to improve working conditions.
Shein responded by stating it was “working hard” to address these issues and had made “significant progress” in enhancing conditions for its workers.
Potential impact on London’s financial market
Listing Shein on the London Stock Exchange would be a significant boost for the City of London, generating substantial business for the financial services industry, which comprises over 10% of the UK’s economy.
Colleen McHugh, Chief Investment Officer at Wealthify, described the potential listing as “big news for the London stock market” during an interview on the BBC’s Today programme.
However, McHugh acknowledged that Shein’s listing would not be without controversy, given the ongoing ethical and environmental concerns surrounding the company.
Filing the initial prospectus with the Financial Conduct Authority (FCA) is expected to be the first step, although it does not guarantee the float will proceed.
Corporate engagements and regulatory considerations
Shein’s executive chairman, Donald Tang, who is an American citizen and former Bear Stearns banker in Asia, has been actively engaging with UK officials.
Tang has met with Chancellor Jeremy Hunt and Jonathan Reynolds, the shadow business secretary, to discuss the possibility of floating in London.
A Labour spokesperson confirmed meetings with Shein and emphasized the importance of maintaining high regulatory standards and business practices for any company operating in the UK.
HM Treasury has declined to comment on the matter.
As Shein navigates the regulatory landscape, it remains to be seen whether the company will successfully launch its IPO in the UK and how it will address the ongoing criticisms related to its business operations.
This article first appeared on Invezz.com
