The highly anticipated flotation of Shein, the fast fashion giant, on the London Stock Exchange (LSE) could be one of the largest seen in Europe over the past year. In a period when the LSE has faced challenges in attracting new listings, this move is seen as a potentially significant boost. The UK government, the LSE, and advocates of London’s financial sector have all extended invitations to the Chinese-founded company, signaling their interest in courting Shein as a new listing.
However, this proposal is not without controversy. Shein, whose founder Chris Xu moved the company’s headquarters to Singapore in 2022, faces significant scrutiny over its business practices. Recent questions raised in front of the UK’s business and trade parliamentary committee regarding the source of Shein’s cotton, among other issues, have exacerbated concerns. Campaign group Stop Uyghur Genocide has pledged to pursue a judicial review if the Financial Conduct Authority (FCA) approves the listing. Meanwhile, a petition against Shein has garnered nearly 50,000 signatures on the activist platform 38 Degrees. The company, for its part, has insisted that it maintains a strict policy against forced labor across its supply chain.
Despite these concerns, there are arguments in favor of the listing. Some suggest that it could be a sign of the UK’s openness to international business, helping to drive the LSE’s visibility and attractiveness, particularly after Shein’s failure to list in the US due to similar concerns about forced labor. Yet, these ethical questions about Shein’s operations remain deeply concerning for many, particularly those who prioritize environmental, social, and governance (ESG) standards.
Shein’s business model, which prioritizes cheap, disposable clothing, stands at odds with the growing calls for sustainable practices in the fashion industry. While the company has pledged to reduce its environmental impact, critics argue that the very nature of fast fashion—producing low-cost goods designed for single-use—is incompatible with broader sustainability goals. Moreover, the firm has come under fire for its lack of transparency regarding worker conditions in its supply chain, despite efforts to address some of these concerns.
The proposed flotation, if it involves selling less than 10% of Shein’s equity, would allow the company’s founders and major shareholders to retain control, limiting the influence of minority investors. While the listing would require Shein to adhere to the UK’s corporate governance code—or justify deviations—it could still raise concerns about the lack of governance rights for minority shareholders, especially in the event that they hold involuntary stakes, such as through employee pension plans.
If Shein proceeds with the listing, it would not only provide a substantial influx of capital to the company, but it would also offer a strategic exit for its founders and enable the company to expand its influence in the market. The LSE would benefit from the initial listing and ongoing trading activity, while service providers in London’s financial and legal sectors stand to gain from the associated fees.
On the downside, a Shein IPO would bring the company’s operations into the spotlight, requiring it to disclose financial details and reputational risks that it has previously kept private. Although recent reports place Shein’s estimated valuation between $50 billion and $66 billion, its reluctance to release detailed financial data raises doubts about whether it is ready for the increased scrutiny a public listing demands.
Should evidence emerge of unethical practices—such as forced labor or unsafe working conditions—following the flotation, the company’s stock price could take a significant hit. The potential for public backlash is heightened, especially given the growing awareness and concern over labor exploitation in fast fashion. In this regard, Shein’s situation echoes the cautionary tale of Boohoo.com, the UK-based fast fashion competitor, whose stock price plummeted after reports of poor labor conditions in its supply chain surfaced in 2020. Despite pledging reforms, Boohoo’s stock never recovered, and it now trades at less than 10% of its peak value.
For Shein, the prospect of going public represents a new chapter in its growth. However, the increased transparency and scrutiny that would come with a listing could expose the company to risks it has not faced in its private operations. Whether this will result in a positive or negative outcome for both Shein and the LSE remains to be seen, but the conversation about the ethical and environmental implications of its business model is likely to intensify.
Ultimately, Shein’s potential listing could be a watershed moment for the fast fashion industry, pushing difficult questions about labor, sustainability, and corporate responsibility into the public eye. The increased scrutiny, however, may also be a double-edged sword, offering both opportunities and risks for the company and the wider industry.
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