Shein eyes London Stock Exchange listing

Shein, the controversial fast fashion company whose popularity zoomed during Covid, may soon tighten its relations with the UK with plans to sell shares in the business on the London Stock Exchange.

Plans for UK Market Entry

Shein, the fast fashion giant that gained immense popularity during the COVID-19 pandemic, is considering a significant move to sell shares on the London Stock Exchange.

The Chinese firm could file the necessary paperwork as soon as this week, potentially valuing the company at $66 billion (£51.7 billion).

Shein’s Business Model

Shein’s rapid success stems from its strategy of offering a vast array of affordable clothing, heavily promoted through social media influencers.

This approach has positioned Shein as one of the world’s largest fashion retailers. However, the company has faced intense criticism for its environmental practices and allegations of forced labor within its supply chain. A spokesperson for Shein declined to comment on these issues.

Shift from US to UK

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Shein is exploring the UK for its share listing after encountering challenges and increased scrutiny in the US.

The company filed documents in the US last November, but faced opposition from some US lawmakers concerned about Shein’s ties to China amidst rising tensions between Washington and Beijing.

Shein’s business model relies on thousands of third-party suppliers and contract manufacturers near its headquarters in Guangzhou, China, enabling rapid production cycles.

Impact on London’s Financial Market

A potential UK listing would be a significant boon for the City of London, providing substantial business for the financial services sector, which contributes over 10% to the UK’s economy.

This move comes as the UK government strives to make the country more appealing for companies to set up operations, following several firms opting for the US market instead.

Controversies and Regulatory Challenges

The company’s decision to file the initial paperwork, known as a prospectus, with the Financial Conduct Authority (FCA) could happen this week or later in June. Filing a prospectus is a prerequisite for any company wishing to sell shares on the London Stock Exchange. Despite the potential benefits, Shein’s listing would not be without controversy.

Last year, US lawmakers called for an investigation into claims that Uyghur forced labor is used in some of Shein’s products. The company has consistently denied these allegations, stating a zero-tolerance policy for forced labor.

Ongoing Labor Issues

Recent reports have also highlighted labor concerns, with Swiss advocacy group Public Eye revealing that some workers for Shein’s suppliers work 75 hours a week, despite the company’s promises to improve conditions.

Shein responded by stating it is “working hard” to address these issues and has made “significant progress” in enhancing worker conditions.

Executive Engagement and Future Prospects

Shein’s executive chairman, Donald Tang, an American citizen and former Bear Stearns banker, has engaged with UK officials, including Chancellor Jeremy Hunt and Shadow Business Secretary Jonathan Reynolds, to discuss the potential London listing after facing resistance from US regulators and lawmakers.

A Labour spokesperson emphasized the importance of high regulatory standards and best business practices for any company operating in the UK.

As Shein proceeds with its plans, the final decision rests with the UK regulator. The company’s controversial background suggests that the listing, if it goes ahead, will attract significant scrutiny and debate.