The Memo: Shein's potential listing on the London Stock Exchange: Why is it so controversial?

Shein, the controversial Singaporean-domiciled online retailer, is moving towards a listing on the London Stock Exchange. The ultra-fast fashion company originally intended to float its initial public offering (IPO) on the New York Stock Exchange (NYSE)but faced hurdles due to ethical concerns and its major Chinese operations. The company, which rose in popularity during the pandemic for its low-priced clothing, has faced its fair share of contention. Not only has the business been repeatedly accused of copying other brands and promoting overconsumption, racking up RICO and counterfeiting lawsuits, but it has also been the subject of numerous allegations of forced labour and unethical working practices. This is something the company has denied, even inviting influencers to look around one of its factories. 

The London Stock Exchange appears to be entertaining the IPO, which was valued at $66bn in its last funding round. If successful, this would be the largest and most significant deal in years for the LSE, and its second-largest IPO in history. So, this could be especially important for LSE, which has somewhat lost its status as an international hub post Brexit, missing out on various big deals which wentto the NYSE instead. Several UK companies have departed to float on the NYSE, such as the biotech company Abcam. Several human rights groups have accused Shein of forced labour, which have been repeatedly denied. Therefore, UK asset management funds will struggle to find support for the IPO due to the negative reputational impact.   

Solicitors have advised that the Financial Conduct Authority (FCA) should refuse Shein’s application. Michael Polak, a barrister and chair of Lawyers for Uyghur Rights, has agreed, stating that the FCA must consider the evidence of human rights violations before publicly listing the company in the UK. With pushback from US lawmakers preventing the company’s NYSE IPO, an IPO on this side of the pond will certainly face plenty of public interest, if not public scrutiny.

To find out more about IPOs and what lawyers get up to when a company gets listed on the stock exchange, you can check out our handy capital markets practice area guide here.