image source, Getty Images
- Author, Oliver Smith
- Role, Business reporter, BBC News
Chinese fast fashion firm Shein has filed initial paperwork and moved a step closer to listing on the London Stock Exchange, the BBC understands.
The online retail giant, which is based in Singapore but has extensive operations in China, recently filed confidential documents with British regulators, according to sources close to the process.
Shein has become one of the world’s biggest fashion retailers during the pandemic, but has faced criticism over the environmental impact of its business model.
The firm has also come under fire for some of its labor practices, which include allegations of forced labor in its supply chain – which the company denies.
Both Shein and the UK regulator, the Financial Conduct Authority (FCA), declined to comment on a potential London listing, which could value the company at around £50 billion.
US warning against Great Britain
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 stage in the process and brings the company one step closer to a UK listing – the sale of shares in the business on the London Stock Exchange – but it does not necessarily mean it will end up listing there.
In fact, the most likely route for Shein was initially thought to be a U.S. listing after the company filed documents there late last year, but that move has come under intense scrutiny from both Republican and Democratic politicians over concerns about the company’s close ties. to China.
In early June, Marco Rubio, the top Republican on the US Senate Intelligence Committee and an ally of Donald Trump, wrote to British Chancellor Jeremy Hunt to warn him of “serious ethical concerns” and Shein’s “deep ties to the People’s Republic of China”. .
“Slave labor, deals and business gimmicks are the dirty secrets of SHEIN’s success,” Mr. Rubio wrote in his letter to Mr. Hunt.
“The UK today has a rich tradition of abolitionism, from Wilberforce and Cowper to the Modern Slavery Act. I trust that you will take these allegations against SHEIN with the utmost seriousness, fully investigate them and take appropriate measures to protect investors,” he added.
image source, Getty Images
UK MPs have also expressed concern, but Labour’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 up to closer scrutiny.
In a business election debate hosted by Bloomberg, Mr. Reynolds said he had met with company representatives.
“My view on any business of this kind is that if they are doing business in the UK, ideally we should be trying to regulate them from the UK.
“The expectations that we would have, whether it’s the labor market, compliance or tax – that’s best done when they’re based in the UK.
“So if enrollment was to be considered, I would want it because I would know that is the way we can enforce the high standards that we would expect,” he added.
His opponent in the debate, Conservative Business Secretary Kemi Badenoch, said she was concerned about the potential write-up, but added: “It doesn’t mean we don’t want them.
Ms Badenoch admitted she had yet to meet anyone from the company and said one concern was Shein’s business model of sending smaller parcels directly to customers in the UK. Under customs rules, duty is not payable on goods under £135 and she said it could mean “quite a lot lost in terms of tax” for the government.
Ms Badenoch also said she would “like to look into” allegations of forced labour.
“The city is regulated and we have regulators who do that. I am talking specifically about this business and what we would like to see.
“We don’t want a situation where the business secretary is interfering with every single minute … but those are my particular issues with Shein,” Ms Badenoch said.
Some parts of the UK fashion sector have also called for caution. The British Fashion Council (BFC), which represents the likes of Burberry and Mulberry, said Shein’s listing would be “of great concern to British fashion designers and retailers”.
“Fashion businesses, including Shein, must embrace corporate due diligence in their supply chains. The BFC encourages the UK Government, the Financial Conduct Authority and the London Stock Exchange to ensure that any trading listing in London is an active, responsible leader in this regard and is able to demonstrate that it addresses compliance and sustainability issues across the board, from employees. material handling to engaging citizens in a one-off way,” said Caroline Rush, BFC Chief Executive.
Despite the criticism, Shein’s potential entry would be seen by many as a major boost for London, which has seen a number of major companies leave the city for the US.
In an interview with the BBC last month, the head of the London Stock Exchange, Julia Hoggett, said the move would ensure the company became more transparent.
“Any company that wants to be scrutinized on the public markets – that’s an opportunity for them to raise the bar in how they approach corporate governance and how they approach investors, and I think that’s very important. the value that public markets have,” she said.