Thursday, June 20, 2024

The Brands: Shein’s IPO: British Fashion Council shows concerns

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As plans to list Shein in London–a £50 billion IPO–seem to be becoming more real, the British Fashion Council (BFC) is joining the chorus of those concerned about the deal. As revealed in the British media, Caroline Rush, chief executive, British Fashion Chamber, said: “At a time when the world’s fashion leaders are rightly focused on making our industry more socially, environmentally and economically sustainable, the government’s courtship of Shein to list on the London Stock Exchange, and Shein’s decision to do so, is a cause for considerable concern for UK fashion designers and retailers.”

Photo: British Fashion Chamber

Caroline Rush

Mathias Bolton, head of commerce at UNI Global Union (International Federation of Service Sector Unions), told The Guardian: “Shein should not be rewarded with the credibility of being listed in the City, or anywhere else, given the lack of transparency in the supply chain and shocking reports of serious labor violations.”

 

Alena Ivanova, an activist with Labor Behind the Label (a Bristol-based non-profit cooperative organization fighting for workers’ rights in the garment industry), expressed her organization’s dismay after learning of Shein’s impending UK listing. Among the reasons were a lack of transparency about its supply chain and ethical concerns, including allegations of forced labor in the Uyghur region of China and a “heedless approach to design appropriation.”

 

According to reports in The Sunday Times, Shein uses the practice of airfreighting individual packaged orders directly from Chinese warehouses to consumers’ homes to reduce import duties (12% on clothes).

 

Last week, the ultra fast-fashion group founded in China and now based in Singapore, was given as ready to submit a prospectus to the FCA-Financial Conduct Authority, the British financial regulator, shortly, and by June at the latest. The submission will be in the form of a “confidential” Initial Public Offering (IPO-Initial Public Offering), which allows companies seeking to list greater flexibility and the ability to withhold information about future strategy prior to listing.

 

There are already rumors that Shein does not meet the minimum 25% free float requirement for companies incorporated outside The UK, a factor that would exclude it from the FTSE 100 index.

 

The placement would come after The UK reached its lowest level in decades in 2023 in terms of raising through IPOs (about US$1 billion, as reported by Bloomberg).

 

 

 

Last November, Shein attempted to start the US listing process by submitting a confidential document to US regulators, but a bipartisan group of lawmakers asked the SEC (US Security and Exchange Commission) to block the offering until it was verified that the company does not use forced labor. Shein does not own or operate any manufacturing facilities but relies on about 5,400 third-party contract manufacturers, mainly in China.

 

As plans to list Shein in London–a £50 billion IPO–seem to be becoming more real, the British Fashion Council (BFC) is joining the chorus of those concerned about the deal. As revealed in the British media, Caroline Rush, chief executive of the British Fashion Chamber, said: “At a time when the world’s fashion leaders are rightly focused on making our industry more socially, environmentally and economically sustainable, the government’s courtship of Shein to list on the London Stock Exchange, and Shein’s decision to do so, is a cause for considerable concern for UK fashion designers and retailers.”

 

Mathias Bolton, head of commerce at UNI Global Union (International Federation of Service Sector Unions), told The Guardian: “Shein should not be rewarded with the credibility of being listed in the City, or anywhere else, given the lack of transparency in the supply chain and shocking reports of serious labor violations.”

 

Alena Ivanova, an activist with Labor Behind the Label (a Bristol-based non-profit cooperative organization fighting for workers’ rights in the garment industry), expressed her organization’s dismay after learning of Shein’s impending UK listing. Among the reasons were a lack of transparency about its supply chain and ethical concerns, including allegations of forced labor in the Uyghur region of China and a “heedless approach to design appropriation.”

 

According to reports in The Sunday Times, Shein uses the practice of airfreighting individual packaged orders directly from Chinese warehouses to consumers’ homes to reduce import duties (12% on clothes).

 

Last week, the ultra fast-fashion group founded in China and now based in Singapore, was given as ready to submit a prospectus to the FCA-Financial Conduct Authority, the British financial regulator, shortly, and by June at the latest. The submission will be in the form of a “confidential” Initial Public Offering (IPO-Initial Public Offering), which allows companies seeking to list greater flexibility and the ability to withhold information about future strategy prior to listing.

 

There are already rumors that Shein does not meet the minimum 25% free float requirement for companies incorporated outside The UK, a factor that would exclude it from the FTSE 100 index.

 

The placement would come after The UK reached its lowest level in decades in 2023 in terms of raising through IPOs (about US$1 billion, as reported by Bloomberg).

 

 

 

Last November, Shein attempted to start the US listing process by submitting a confidential document to US regulators, but a bipartisan group of lawmakers asked the SEC (US Security and Exchange Commission) to block the offering until it was verified that the company does not use forced labor. Shein does not own or operate any manufacturing facilities but relies on about 5,400 third-party contract manufacturers, mainly in China.

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