Taking the shine off Shein

Test for new Labour government over listing of Shein on LSE

July 2024

The new government – likely to be Labour after the election tomorrow – will have an early test in connection with the Chinese clothing firm Shein which wishes to list on the London Stock Exchange. Both Conservative and Labour politicians have been keen to support the bid whereas Wall Street declined for a variety of reasons and doubts about the firm.

Shein has grown at a phenomenal pace but there are many doubts about its finances. LSE is keen to list the firm and there are a range of banks including Goldman Sachs and JP Morgan ready and willing to assist. Today, it was announced the EU is changing the rules which enabled the firm to import millions of pounds of clothing yet avoid duties because each was individually packed thus taking them under the £135 rule.

But the main problem is how the raw material is sourced and the use of sweat shops via sub-contractors in Bangladesh and Vietnam. As we have noted before, about three quarters of the cotton produced by China comes from Xinjiang where there are credible reports of the use of forced labour. In addition is the appalling treatment of Uyghurs where nearly a million are being persecuted and whose culture is being systematically destroyed. It has been described as a crime against humanity and genocide. Shein rejects these allegations and says it is committed to good governance.

Another problem is that the firm is likely to be audited by one of the big four accountancy firms who have a dismal record when it comes to Chinese firms and have been fined on several occasions for accounting scandals.

The Labour party has been keen to court the City as part of its business friendly policy. Three shadow ministers have met Shein’s chairman. Will they play their part in welcoming Shein to the LSE to keep the city bankers happy or will they look closely at their labour practices, lack of transparency and the probable use of cotton from Xinjiang? Amnesty have said to allow them to list will be a ‘badge of shame’. It will be an early test for the new government: money v. morals.

Sources: Private Eye #1626; Guardian; Amnesty International; Stop Uyghur Genocide