Concern: Top investors have warned that courting Shein reeks of desperation
The British Fashion Council (BFC) has warned Shein’s planned £50 billion float on the London Stock Exchange is a ‘significant concern’ to the industry.
In a snub that could dent the Chinese online fashion giant’s efforts to woo the City, the influential trade body said ‘questions remain’ about the group’s controversial business practices.
Shein has been criticised for using suppliers who exploit low-paid garment workers in China in order to sell its clothes at knockdown prices.
The BFC’s intervention comes at a critical time for Shein as it reportedly finalises plans to list London in what would be this year’s biggest flotation.
A backlash from the BFC’s US equivalent, the National Retail Federation, was one of the reasons that Shein had to ditch its original plans to float in New York.
Shein is not part of the BFC, whose members include Mulberry, Burberry and Jimmy Choo, while patrons include River Island and Jigsaw.
The BFC did not comment on whether Shein would be allowed to join in 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’s courting of Shein to list on the London Stock Exchange, and Shein’s decision to do so, is of significant concern to UK fashion designers and retailers.
‘Whilst we appreciate that Shein has committed to meeting acceptable industry standards, questions remain about the ethicality and sustainability of a business model and supply chain that consistently undercuts British designers and retailers, and these still need to be answered.’
The BFC wants the Government to do more to support an ethical fashion economy and pledge to strengthen clothing market regulation. Ministers must act to ‘ensure a level playing field for all businesses in the sector,’ Rush said.
High Street retailers are also unhappy because Shein is able to dodge hefty custom taxes as it ships directly to online shoppers from China.
Due to its size, the Chine 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 beleaguered stock market, which has grappled with an exodus of companies and a dearth of blockbuster listings.
But top investors have warned the LSE that courting Shein reeks of desperation.
Shein has hired top PR firms and joined the British Retail Consortium in a bid to win over the business community.
Chairman Donald Tang has also met with Chancellor Jeremy Hunt and discussed a listing with the Labour Party in recent weeks.
A Shein spokesman said: ‘Shein is investing millions of pounds in strengthening governance and compliance across our supply chain.’
The spokesman said that regular audits of suppliers are showing a ‘consistent improvement in performance and compliance’ and that includes making sure workers are paid ‘fairly’.
Shein is based 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.
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