Shein Plans to Float Shares on the London Stock Exchange

Chinese fast fashion giant Shein may soon tighten its ties with the United Kingdom with plans to sell shares on the London Stock Exchange. The company is expected to file the necessary paperwork this week, potentially valuing the firm at $66 billion (£51.7 billion).

Shein Plans to Float Shares on the London Stock Exchange
Shein Plans to Float Shares on the London Stock Exchange

Chinese fast fashion giant Shein may soon tighten its ties with the United Kingdom with plans to sell shares on the London Stock Exchange. The company is expected to file the necessary paperwork this week, potentially valuing the firm at $66 billion (£51.7 billion).

Shein has become one of the world's largest fashion retailers by offering a wide range of inexpensive clothing and running campaigns with social media influencers. However, the company has faced severe criticism over its environmental practices and allegations of forced labor in its supply chain. A spokesperson for Shein declined to comment.

In a bid to boost its green credentials, the company launched a resale platform in France on Monday. This option was first introduced to US customers two years ago. The platform is set to launch in the UK and Germany later, although no specific date has been given.

Shein is considering the UK as a place to sell its shares after facing hurdles and intense scrutiny in the US. The company filed documents in the US last November but faced concerns from some US lawmakers about its links to China amid rising tensions between Washington and Beijing.

The company relies on thousands of third-party suppliers and contract manufacturers near its headquarters in Guangzhou, China. It has accelerated the "test and repeat" model, first used by the likes of Zara owner Inditex, where companies place small orders of clothing items, see how they perform with shoppers, and then order more if they are successful.

This move could be a significant boost for the London Stock Exchange. A UK share listing generates substantial business for the wider financial services industry, which still makes up more than 10% of the UK's entire economy. After several firms have opted for the US, the UK government has been working hard to make the country more attractive for companies to set up shop.

The company may file the initial paperwork - known as a prospectus - with the Financial Conduct Authority (FCA) this week, sources said, or it could happen later in June. Filing a prospectus with the FCA is a required first step for any company that wishes to sell shares on the London Stock Exchange.

“This could be big news for the London stock market,” said Colleen McHugh, chief investment officer at Wealthify, speaking to the BBC’s Today programme. However, she admitted the company may face some difficulties over claims about its business practices.

Last year, a group of US lawmakers called for Shein to be investigated over claims that Uyghur forced labor is used to make some of the clothes it sells. Shein told the BBC at the time, "We have zero tolerance for forced labor." In May, a report suggested that workers for some of Shein's suppliers are still working 75 hours a week, despite the company's promise to improve conditions. The investigation by Swiss advocacy group Public Eye found that a number of staff across six sites in the manufacturing hub of Guangzhou were doing excessive overtime.

According to the group, which interviewed 13 employees from six factories in China supplying Shein, excessive overtime was common for many workers. Shein told the BBC it was "working hard" to address the matters raised by the Public Eye report and had made "significant progress on enhancing conditions."

On the potential London listing, McHugh said, "It’ll be down to the regulator as to whether or not the listing can go ahead here [in the UK] – but it won’t be without controversy."

Shein's executive chairman Donald Tang is an American citizen and a former banker for Bear Stearns in Asia. He has met both Chancellor Jeremy Hunt and Shadow Business Secretary Jonathan Reynolds in recent months to discuss the possibility of floating in London after encountering resistance from regulators and lawmakers in the US.

A Labour spokesperson said it had met a range of companies, including Shein, "that are looking to invest or list in Britain." The spokesperson added, "We expect the highest regulatory standards and business practices from any company operating in the UK. We believe the best way to ensure this is to have more companies operating from and regulated by UK law."