Image source, Getty Images
- Author, Olivier Smith
- Role, Business reporter, BBC News
Chinese fast-fashion company Shein has filed the first papers, bringing it one step closer to a 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 the confidential paperwork with British regulators, according to sources close to the process.
Shein became one of the world’s largest 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 working practices, including allegations of forced labor in its supply chain – something the company denies.
Both Shein and the British regulator, the Financial Conduct Authority (FCA), declined to comment on a possible London stock exchange listing, which could value the company at around £50 billion.
US warning to UK
A company wishing to sell its shares in Britain must first apply to the FCA for approval of a prospectus containing detailed financial information.
Filing paperwork is the first stage of that process and brings the company one step closer to listing in Britain – selling shares in the company on the London Stock Exchange – but doesn’t necessarily mean it will ultimately go there. fair will go.
In fact, a US listing was initially thought to be the most likely route for Shein after the company filed papers there late last year, but the move was closely watched by both Republican and Democratic politicians, amid concerns about the close ties of the company. to China.
Earlier in June, Marco Rubio, a leading Republican on the US Senate Intelligence Committee and an ally of Donald Trump, wrote a letter to British Chancellor Jeremy Hunt warning him of “serious ethical concerns” and Shein’s “deep ties to the People’s Republic of China’. .
“Slave labor, sweatshops and trading tricks are the dirty secrets behind SHEIN’s success,” Mr. Rubio wrote in his letter to Mr. Hunt.
“The UK has a storied tradition of abolitionism, from Wilberforce and Cowper to the Modern Slavery Act in our time. I trust that you will treat these allegations against SHEIN with the utmost seriousness, fully investigate them and take appropriate action to protect investors,” he added.
Image source, Getty Images
British MPs have also raised concerns, but Labour’s shadow secretary of state Jonathan Reynolds indicated on Monday he would welcome Shein to list his shares in London as it would open the company up to further scrutiny.
During a corporate election debate hosted by Bloomberg, Mr. Reynolds said he had met with company representatives.
“My view on these types of companies is that if they are doing business in Britain, ideally we should try to regulate them from Britain.
“The kind of expectations that we would have, whether that be in terms of the labor market, regulatory compliance or taxation, are best done from the fact that they are based in Britain.
“So if a stock market listing were to be considered, I would want that because I would know that this is the way we can enforce the high standards we expect,” he added.
His opponent in the debate, Conservative Business Minister Kemi Badenoch, said she was concerned about a possible stock market listing, but added: “It doesn’t mean we don’t want them.”
Ms Badenoch admitted she had not yet met anyone from the company and said one of the concerns had to do with Shein’s business model of sending smaller parcels directly to customers in Britain. Under customs rules, no duties are paid on goods under £135, and she said this could mean “quite a lot of tax loss” for the government.
Ms Badenoch also said she would like to look into the allegations surrounding forced labour.
“The city is regulated and we have regulators who do that. I’m talking specifically about this company and what we would like to see.
“We don’t want a situation where the business secretary is interfering with every single listing… but those are my particular issues with Shein,” Ms Badenoch said.
Some parts of Britain’s fashion sector have also urged caution. The British Fashion Council (BFC), which represents companies such as Burberry and Mulberry, said a stock market listing for Shein would be “of great interest to British fashion designers and retailers”.
“Fashion companies, including Shein, must embrace 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 every listed company in London is an active, responsible leader in this regard and can demonstrate compliance and compliance in all areas. sustainability, from employee treatment to material sourcing to citizen engagement on disposable fashion,” says Caroline Rush, the CEO of the BFC.
Despite the criticism, a potential Shein listing would be seen by many as a big boost for London, where a number of high-profile companies have left 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 make the company more transparent.
“Any company that wants to subject itself to scrutiny by entering the public markets – that’s an 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 is very important. the value that public markets have,” she said.