In a parallel world, we might now be preparing for the arrival on the London stock market of Shein, the giant Chinese-founded fast-fashion retailer. Or it could have happened already.
The possibility of a London flotation was a running story during 2024 and into last year as politicians from both main parties engaged in behind-the-scenes wooing. Shein was seen as a shot of tech adrenalin for a listless local listings scene, and an opportunity to advertise the UK’s openness to international capital.
Instead, Shein will float next week in Hong Kong. To which one can only say: thank goodness for that.
In a listings context, Shein was a cast-off. The company had rejected New York amid tensions between Washington and Beijing and hostile questions from US lawmakers over labour practices in its supply chains in China. London was merely the next-best option for a company whose owners seemed suspiciously anxious to find a stock market home in the west.
London did its reputation no favours with its willingness to jump. The Financial Conduct Authority, in charge of listings, took the view that it was “not unusual” for UK-listed companies to carry legal risks around the world and that what mattered was disclosure to allow investors to form their own view. The Labour government sounded keen. Donald Tang, the banker hired as Shein’s chair, did a round of feelgood meetings.
This positivity was punctured, however, in January last year when Shein’s general counsel in Europe appeared at the Commons business select committee and stone-walled.
Did Shein source cotton from China, asked the committee chair, Liam Byrne. The company representative was not qualified to reveal such “detailed operational information”. Byrne had not even been asking at that point about allegations of use of cotton produced in the Xinjiang region, which has been linked to Uyghur forced labour.
The company, it should be added, had already said it had signed statements of compliance to modern slavery acts in the US, UK and elsewhere. But Byrne’s view was entirely fair: “The reluctance to answer basic questions has frankly bordered on contempt of the committee.”
The idea of listing in London soon went away – encouraged, it seemed, by pressure from Beijing. And so, Hong Kong it is.
Note, though, how the company’s price tag has shrunk from the £50bn that was talked about during the London leg of the global tour. The valuation will be $27bn (£20bn).
That figure also reflects the other issue that has dogged Shein: political and societal resistance to the practice of shipping goods in small packages out of China to take advantage of tax breaks on low-value imported goods. The US has already closed such “de minimis” exceptions as part of President Trump’s tariffs wars; the EU says it will phase them out; the UK intends to get there by 2029. Shein used to argue that its business model did not depend on tax breaks, but the reduced valuation suggests that investors do not regard the issue as irrelevant.
In a world in which Shein had somehow managed to list in London last year, the valuation drop would have been felt here. The supposedly hot prize would look substantially less so. London dodged a bullet on this one. Those politicians who encouraged the flirtation might reflect that, while the stock market is obviously desperate for exciting newcomers, you’ve got to choose your targets carefully. Nobody is talking about a missed opportunity.
