Senior UK politicians call for greater scrutiny of potential Shein IPO

Senior politicians, including three parliamentary committee chairs, have called for more scrutiny of Shein as the fast-fashion retailer founded in China sets its sights on a London stock market listing.

Shein is reportedly in talks to float on the London Stock Exchange after an attempt to float in New York faced regulatory hurdles.

The company has risen from relative obscurity to dominate the fast-fashion market and is known for ultra-cheap clothing such as dresses, crop tops and bikinis.

It has faced allegations of labour malpractices, with tough scrutiny from the US Congress stalling the company’s efforts to list in New York.

Rishi Sunak’s government has appeared eager to woo Shein to London instead. The company’s executive chair, Donald Tang, met Jeremy Hunt, the chancellor, in February.

But senior British politicians said a Shein listing should not be allowed to go ahead while parliament is dissolved for the general election and the initial public offering (IPO) should be subjected to greater scrutiny.

Alicia Kearns, the Conservative chair of the Commons foreign affairs committee, said: “With Shein’s prices so low the London Stock Exchange needs to ask itself, whose suffering is subsiding those prices?”

“A company which has failed to make full disclosures about its supply chains as required by UK law, and where there are grave concerns about its factory working conditions has no place in London.”

Shein was accused in 2021 of failing to make full disclosures about its supply chains. A spokesperson for the company told the Guardian: “Our modern slavery statement is published and publicly available on our UK website, as required by UK law.”

Sarah Champion, the Labour chair of the international development select committee, said: “Transparency in supply chains is vital and something all governments should be demanding. Serious concerns have been raised about the use of modern slavery by Shein which need investigating.”

Liam Byrne, the Labour chair of the business select committee, said: “It is not ideal that Shein’s floating in London could get the green light without parliamentary scrutiny. Parliament needs to satisfy itself that the concerns raised recently by the US Congress of forced labour in Shein’s supply chains have been thoroughly addressed.”

If the London IPO were to go ahead, it would be one of the City’s biggest ever corporate listings and a boost to its reputation as an international financial centre.

Shein’s UK business made £1.1bn in sales last year, and a pre-tax profit of £12.2m in the 16 months to 31 December 2022, according to documents filed with Companies House. Globally, the group made $30bn in revenues last year.

In late 2022, it pledged to invest in improving standards at its supplier factories.

The government has sought to attract more firms to the London Stock Exchange after the Cambridge-based chipmaker Arm snubbed ministers by opting for the Nasdaq in New York.

Sajid Javid, the former chancellor, is among several figures who have been approached about taking a role at the company, Sky reported last week. The Guardian approached Javid for comment.

Alistair Carmichael, the Liberal Democrat MP and chair of the all-party parliamentary group on Uyghurs, said: “When it comes to a company like Shein and whom it uses in its labour and supply chains in China, we need more serious scrutiny.”

David Alton, a crossbench peer and Uyghur rights campaigner, said: “No decision should be made while parliament is dissolved, and should be subject to detailed scrutiny by select committees in both Houses.”

Kate Larsen, a former senior manager for corporate responsibility at Burberry who trains investors on ethical supply chains, said there were many concerns about Shein’s practices.

“Shein order their garments from hundreds and maybe thousands of small workshops mostly in China – you just cannot monitor labour standards as well across thousands of small supply chain partners,” Larsen said.

“Their business model is that mostly they don’t ship big container loads, you order a garment and you just get that package straight from China most of the time. This means they can often bypass customs, import taxes and inspections.”

A spokesperson for Shein said: “We take visibility across our entire supply chain seriously. Shein has a zero-tolerance policy for forced labour and we are committed to respecting human rights. We require our contract manufacturers to only source cotton from approved regions.”

“Shein is investing millions of pounds in strengthening governance and compliance across our supply chain. Our regular supplier audits are showing a consistent improvement in performance and compliance by our supplier partners. This includes improvements in ensuring that workers are compensated fairly for what they do.”