UK: Chinese fast-fashion giant Shein wants to list on the London Stock Exchange, but claims of abuse and links to China are causing the Government a headache

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The Chinese fast-fashion brand Shein has spent more than a year working on a plan to list its shares on the London Stock Exchange, and successive British governments have tried to help.

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Yet this business deal could have huge ramifications that stretch far beyond the Square Mile.

That’s not just because of the many accusations that have dogged Shein for years – including forced labour in its supply chain, environmental recklessness, and tax-loophole exploitation at the expense of traditional retailers.

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Jeremy Hunt did his best to reel in Shein in his final months as chancellor last year, and his successor [Rachel Reeves] has continued those efforts. Having proclaimed that economic growth is the “number-one mission” of her Government, Reeves wants to demonstrate to China that the UK is open for its business.

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Shein and claims of forced labour

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An undercover investigation by Channel 4 in 2022 found that labourers making Shein’s clothes in contractors’ factories were often working up to 18 hours a day, and being paid as little as 3p per item, with no weekends and only one day off per month.

The revelations led some influencers to refuse any further work with Shein, and the Rolling Stones cancelled a licensing deal with the brand after The i Paper alerted them to the scandal.

The company vowed to invest millions to improve standards after confirming that some suppliers were abusing workers. But last year another investigation by the Swiss campaign group PublicEye concluded that “illegal working hours” were still common for many workers in Guangzhou. Shein said it takes “firm action” if suppliers break local laws.

Just last week it admitted that audits had uncovered two cases of child labour in supplier factories. Shein terminated contracts with the firms involved immediately, saying it would “work tirelessly to ensure that these isolated cases are removed from our supply chain entirely in future”.

The UK’s Independent Anti-Slavery Commissioner, Eleanor Lyons, warned last year: “Encouraging a company like Shein to float on the UK market inadvertently implies endorsement of poor labour practices.” Human rights campaigners fear that we could all become complicit if UK pension funds buy shares in the company.

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In January, a senior Shein lawyer repeatedly refused to tell the Commons Business Committee whether its products contain cotton from Xinjiang. She also failed to answer questions about the flotation, leaving committee chairman Liam Byrne “pretty horrified by the lack of evidence” presented to MPs by the firm.

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Shein has been laying the ground carefully in London. It has employed Global Counsel, the lobbying firm owned by Lord Mandelson – now British ambassador to the US – to approach ministers on its behalf. Another lobbyist – Kamella Hudson of FGS Global – accompanied Shein executive chairman Donald Tang to meetings with Labour ministers last year, just months after she assisted Reeves during last summer’s election campaign, according to Bloomberg.

However, revelations about this private courtship have increased the sense of alarm among Labour backbenchers. They have joined the likes of former Tory leader Iain Duncan Smith and ex-security minister Tom Tugendhat warning against the flotation, with the latter previously calling the retailer “a sinister cross between surveillance and capitalism”.

Labour MP Rachael Maskell, who served as shadow employment secretary under Jeremy Corbyn, became concerned about Shein after one of her constituents – a painter who runs a small stationary firm in York – complained it had copied one of her designs, a copyright breach costing £100,000.

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Blair McDougall, the Labour MP who chairs the all-party parliamentary groups on both Hong Kong and Uyghurs, agrees. “Nobody can have any confidence that this is a company whose products are free from slave labour,” he says. “The City of London cannot be a soft touch for unethical companies.”

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Asked about the Chancellor’s apparent support for a London listing, Maskell says ministers “should think again, because it will undermine businesses on all sorts of fronts”. She said it would be a step towards the UK becoming a “bargain-basement economy,” which Starmer himself warned against in 2017.

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Shein hoped to go public in London by Easter, but that is expected to be postponed until the second half of the year after a troubling few months for the company.

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“Investors who have a keen eye on environmental, social and governance issues will be nervous and less inclined to invest in Shein,” says Susannah Streeter [head of money and markets at investment platform Hargreaves Lansdown], calling the company a “laggard” on these issues compared to rivals.

Then again, “listing in London may force it to clean up its act,” she says. “There will be a spotlight trained on it, and Shein appears to have already taken some steps to ensure its supply chain is more transparent.”

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