The London Stock Market Dodged a Bullet with Shein

The news that Chinese fast-fashion giant Shein has opted to list in Hong Kong instead of London next week has been met with relief from those who had been following the story. This is no surprise, given the concerns surrounding Shein’s labor practices and reliance on tax breaks in China.

London’s consideration as a potential listing destination for Shein reflects the desperation of the UK’s financial scene. Politicians from both main parties have long tried to lure big-name companies with promises of a warm welcome and minimal regulatory scrutiny, resulting in questionable listings like Wirecard’s infamous floatation, which eventually collapsed under a cloud of debt and accounting scandals.

Shein had previously rejected listing in New York due to tensions between Washington and Beijing, as well as hostile questions from US lawmakers about its supply chain practices. Yet London seemed willing to take on the risk despite concerns about Shein’s labor record and tax breaks in China.

The Labour government’s enthusiasm for Shein’s listing was striking, given the company’s reluctance to answer basic questions about its operations, including those related to Uyghur forced labor in Xinjiang. Politicians appeared more interested in wooing a potential new player on the stock market than holding the company accountable for its actions.

Shein’s valuation has shrunk from an initial estimate of £50 billion to $27 billion (£20 billion), reflecting investors’ growing unease about the company’s business model and reliance on tax breaks. This development highlights the need for greater scrutiny of companies looking to list on our stock market as we navigate the complexities of global trade and politics.

London’s politicians should take heed from this episode: while big-name listings can be tempting, they are not worth sacrificing values and principles in the process. A more nuanced approach is needed to attract companies to our stock market, balancing growth with accountability and transparency.

Shein’s decision to list in Hong Kong rather than London serves as a reminder that ethics matter in finance, and it’s time for politicians to take notice.