Concern: Major investors have warned that courting Shein smacks of desperation
The British Fashion Council (BFC) has warned that Shein’s planned £50bn London listing is a “major concern” for the industry.
In a snub that could hit the Chinese online fashion giant’s efforts to court the City, the influential trade body said “questions remain” about the group’s controversial business practices.
Shein has been criticized for using suppliers who exploit low-paid garment workers in China to sell its clothes at bargain prices.
The BFC’s intervention comes at a critical time for Shein as it reportedly finalizes plans to include London in what would be the biggest IPO this year.
A backlash from the US equivalent of the BFC, the National Retail Federation, was one of the reasons Shein had to abandon its original plans to list in New York.
Shein is not part of the BFC, whose members include Mulberry, Burberry and Jimmy Choo, while its sponsors include River Island and Jigsaw.
The BFC did not comment on whether Shein would be allowed to join in the future.
Caroline Rush, chief executive of the trade body, said: “At a time when global fashion leaders are rightly focused on making our sector more socially, environmentally and economically sustainable, the government is courting Shein to to be listed on the London Stock Exchange, and Shein’s decision to do so is of great concern to UK fashion designers and retailers.
“While we appreciate that Shein has committed to meeting acceptable industry standards, questions remain and remain about the ethics and sustainability of a business model and supply chain that consistently undermines British designers and retailers. must be answered.”
The BFC wants the Government to do more to support an ethical fashion economy and commit to strengthening regulation of the clothing market. Ministers must act to “ensure a level playing field for all businesses in the sector”, Rush said.
High Street retailers are also unhappy that Shein can avoid hefty customs duties as it ships directly to online shoppers from China.
Due to its size, the Chinese group would automatically join the ranks of the FTSE 100 alongside other British fashion staples such as M&S and Frasers Group.
Many in the City have been hoping it will revive the troubled stock market, which has grappled with an exodus of companies and a dearth of blockbuster listings.
But major investors have warned the LSE that courting Shein smacks of desperation.
Shein hired top PR firms and joined the British Retail Consortium in a bid to win over the business community.
President Donald Tang has also met Chancellor Jeremy Hunt and discussed a list with the Labor Party in recent weeks.
A Shein spokesperson said: “Shein is investing millions of pounds in strengthening governance and compliance across our supply chain.”
The spokesperson said regular audits of suppliers show “constant improvement in performance and compliance” and that includes ensuring workers are paid “fairly.”
Shein is headquartered in Singapore, but its main manufacturing operations are in China.
As a result, it needs approval from Beijing regulators to list its shares in London.
They blocked Shein’s plans to float in New York amid worsening US-China relations.