As China-founded fast fashion retailer SHEIN seeks to list on the London stock exchange, leading politicians, including three parliamentary chairmen, are calling for increased scrutiny of the company.
Shain is reportedly in talks to list on the London Stock Exchange after facing regulatory hurdles when it tried to list on the New York Stock Exchange.
The company has grown from relative obscurity to dominate the fast fashion market, and is known for its super-cheap clothing, including dresses, crop tops and bikinis.
The company has faced allegations of labor abuses and its efforts to list in New York have been stalled by intense scrutiny from Congress.
Prime Minister Rishi Sunak’s government appears keen to attract Shine to London instead, with the company’s chairman, Donald Tan, meeting with Chancellor of the Exchequer Jeremy Hunt in February.
But leading British politicians said Shine should not be allowed to list while Parliament is suspended for a general election and that the initial public offering (IPO) should be subject to greater scrutiny.
Alicia Kearns, the Conservative chair of the House of Commons foreign affairs committee, said: “With Shane’s share price so low the LSE needs to ask itself who is working so hard to keep the price down.”
“Companies that have failed to provide full disclosure about their supply chains as required by UK law and have serious concerns about working conditions in their factories have no place in London.”
In 2021, SHEIN was criticised for failing to fully disclose information about its supply chain, with a company spokesperson telling the Guardian: “Our modern slavery statement is published on our UK website and available to the public, as required by UK law.”
Sarah Champion, Labour’s chair of the International Development Select Committee, said: “Transparency in supply chains is vital and something every government should demand. Serious concerns have been raised about Shane’s use of modern slavery and it must be investigated.”
Liam Byrne, Labour chairman of the business select committee, said: “It is not ideal that Shain’s London listing be approved without Parliamentary scrutiny. Parliament needs to be satisfied that concerns recently raised by the US Parliament about forced labour in Shain’s supply chain are thoroughly addressed.”
If the IPO goes ahead in London, it would be the largest company listing in London’s history and boost London’s reputation as an international financial centre.
According to documents filed with Companies House, Shane’s UK business generated sales of £1.1 billion last year and made pre-tax profits of £12.2 million for the 16 months to December 31, 2022. The group made revenues of $30 billion globally last year.
The company has committed to investing in improving standards at supplier factories in the second half of 2022.
The government has been trying to attract more companies to the London Stock Exchange after Cambridge-based chipmaker Arm defied ministers and listed on New York’s Nasdaq.
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Sky reported last week that former Chancellor of the Exchequer Sajid Javid was one of several people who had been approached about taking a role at the company. The Guardian has contacted Javid for comment.
Liberal Democrat MP Alistair Carmichael, chair of the cross-party parliamentary group on Uighur issues, said there needed to be “greater scrutiny of companies like Shein and who they employ in their China workforce and supply chain.”
Senator and Uighur rights campaigner David Alton said: “No decisions should be made while Parliament is in recess and should be subject to detailed scrutiny by select committees of both houses.”
Kate Larsen, a former senior corporate responsibility manager at Burberry who advises investors on ethical supply chains, said Shine’s practices raise a number of concerns.
“Shain orders its clothes from hundreds, maybe thousands, of small factories, primarily in China, and it is impossible to properly monitor the labor standards of thousands of small supply chain partners,” Larsen said.
“Their business model is that they don’t ship in big containers. When you order clothes, they just receive the package directly from China in most cases. This means they can often avoid customs procedures, import taxes and inspections.”
A Shane spokesperson said: “We take visibility throughout our supply chain seriously. Shane has a zero-tolerance policy for forced labor and is committed to respecting human rights, and we require our contract manufacturers to only source cotton from approved areas.”
“Shane is investing millions of pounds in strengthening governance and compliance across its supply chain, and our regular supplier audits show steadily improving performance and compliance among our supplier partners, including improvements to ensure workers are fairly remunerated for their work.”
