Senior UK politicians demand greater scrutiny on potential Shein IPO

Three parliamentary committee chairmen, among others, have called for greater scrutiny on Shein, the fast fashion retailer founded in China, as it sets its sights to a London Stock Exchange listing.

Shein has reportedly begun talks with the London Stock Exchange to list on their exchange after a failed attempt to list in New York.

From relative obscurity, the company has grown to dominate fast fashion and is well known for its ultra-cheap clothes such as dresses and crop tops.

The company has been accused of labour abuses and the US Congress is putting a lot of pressure on it to not list in New York.

Rishi Sunak’s government appears eager to lure Shein to London. Donald Tang, the executive chair of the company , met Jeremy Hunt in February.

Senior British politicians have said that a Shein listing shouldn’t be allowed while Parliament is dissolved to hold the general elections and the initial public offer (IPO) needs to be scrutinized more.

Alicia Kearns is the Conservative chairwoman of the Commons Foreign Affairs Committee. She said: “With Shein’s prices so low, the London Stock Exchange must ask itself who’s suffering is subsidizing those prices?”

London should not accept a company that has failed to disclose its entire supply chain as required by UK legislation and has grave concerns over its factory conditions.

Shein was alleged to have failed to disclose its supply chain in 2021. The company’s spokesperson said: “Our statement on modern slavery is available publicly and published on our UK website as required by UK legislation.”

Sarah Champion, Labour’s chairwoman of the International Development Select Committee, said that transparency in supply chains was vital, and should be demanded by all governments. Shein’s use of modern slave labor has raised serious concerns that need to be investigated.

Liam Byrne is the Labour Chair of the Business Select Committee. He said: “It’s not ideal that Shein could be allowed to float in London without parliamentary oversight.” The Parliament must be satisfied that the recent concerns raised by the US Congress about forced labour in Shein’s supply chains has been addressed.

The London IPO would be the largest corporate listing in the history of the City and a major boost to the reputation of London as a financial hub.

According to documents filed at Companies House, Shein’s UK company made £1.1bn last year in sales and had a profit before tax of £12.2m for the 16-month period ending 31 December 2022. Globally, last year the group generated $30bn of revenue.

It pledged to improve standards in its suppliers’ factories by the end of 2022.

The government is trying to get more companies to join the London Stock Exchange, after Cambridge-based chipmaker arm chose the Nasdaq of New York over ministers.

Sky reported last week that Sajid Javid was one of several former politicians who had been approached to take a position at the company.

Alistair Carmichael is the Liberal Democrat MP who chairs the all-party parliamentary Uyghur group. He said that we must pay more attention to a firm like Shein, and the people it employs in its supply and labour chains in China.

David Alton is a cross-bench peer who campaigns for Uyghurs’ rights. He said that no decision should be taken while the parliament is dissolving, but should instead be thoroughly examined by select committees of both Houses.

Kate Larsen is a former senior Burberry manager of corporate responsibility who teaches investors about ethical supply chains. She said that Shein’s actions raised many questions.

Larsen stated that Shein orders their clothing from hundreds, if not thousands, of small Chinese workshops. You simply cannot monitor the labour standards across so many small suppliers.

Their business model is to not ship large container loads. You order a garment, and most of the times you get it straight from China. They can avoid customs, import duties and inspections.

Shein’s spokesperson said that “We take the visibility of our entire supply chain very seriously.” Shein has zero tolerance for forced labor and is committed to human rights. Our contract manufacturers are required to source only cotton from approved regions.

Shein invests millions of pounds to strengthen governance and compliance throughout our supply chain. Regular supplier audits show a consistent improvement of performance and compliance from our supplier partners. This includes improvements to ensure that workers are fairly compensated for their work.”