Helena Lyng Blak
5 weeks ago

UK Regulators Face Scrutiny Over Shein’s Labor Practices Amid London Stock Exchange Plans

Shein’s London Stock Exchange plans spark debate on the political implications.
Assam, india - July 1, 2020 : Shein app a online shopping app. — Photo by seemantaduttaskv@gmail.com
Assam, india - July 1, 2020 : Shein app a online shopping app. — Photo by seemantaduttaskv@gmail.com

The United Kingdom’s position regarding modern slavery may be brought into question, should regulators move forward with mega retailer Shein’s plans to float on the London Stock Exchange. 

“As the election draws near and the manifestos are rolled out – the main parties are vying for support from all quarters. It seems a rare occasion that both the Labour and Conservative parties have a common ground, but that is what we have seen in light of the Chinese clothing retail giant, Shein looking to float on the London Stock Exchange at a reported valuation of over £50 billion,” says John Hartley, partner and head of business and crime regulations at Primas Law according to Retail Times. “A spokesperson for the Labour party has reportedly said ‘Raising investment, productivity and growth is one of Labour’s missions for government.’”

What is Shein?

Shein is one of the largest and most famous “ultra-fast fashion” companies to emerge from China in recent years, significantly boosted by the surge in cheap online shopping during the COVID-19 pandemic.

In 2020 alone, the fashion brand generated $10 billion in sales, tripling its revenue from 2019. According to Bloomberg, this made Shein the largest exclusively online fashion brand in the world.

Ultra-fast fashion sets itself apart from “regular” fast-fashion brands like H&M or Zara by the incredibly rapid speed and immense volume at which it produces clothes. Often catering to “microtrends”—short-lived, particularly online trends with a niche audience—Shein lists as many as 1.3 million items simultaneously. By comparison, H&M introduces about 25,000 new items a year.

The company is expected to achieve a valuation between $50 billion and $66 billion.

But London was not Shein’s first choice, once it began to realize its plans to go public.

Why Are US Regulators Resistant to the Brand?

Despite explosive growth and strong sales, United States lawmakers have been skeptical of Shein and similar companies for several reasons.

On a political level, Shein is entangled in the rising tensions between the US and China. This was evident earlier this year when US lawmakers moved to ban the Chinese-owned app TikTok, and in 2021, when the SEC raised concerns about the risks associated with investing in Chinese companies.

“Recent events have highlighted the risks associated with investing in companies that are based in or that have the majority of their operations in the People’s Republic of China,” the SEC’s division of corporation finance said at the time, according to Bloomberg.

Ethically, the company has faced criticism for its practices, including its detrimental impact on the environment, accusations of stealing designs and photos from other businesses, and allegations of involvement in human rights abuses in the Chinese Xinjiang region.

“A significant aspect of the reluctance among US regulators was the online retailer’s alleged connections to forced labor of the Uyghur population in the Xinjiang region of China. The US has strict sanctions regimes in place for businesses which may have supply chain connections to that region of China,” Hartley explains.

What is the UK’s Position?

“This therefore leads to the topic of what the UK’s position is regarding modern slavery and international human rights if they are seriously considering Shein’s plans,” Hartley says. 

He explains that the UK has global human rights sanctions available, highlighting the fact that the British government already has frozen the assets of several Chinese businesses due to violations against the Uyghur people.

"We expect the highest regulatory standards and business practices from any company operating in the UK. We believe the best way to ensure this is to have more companies operating from and regulated by UK law," a Labour spokesperson told BBCin early June.


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