British Politicians Call for Heightened Scrutiny of Shein’s Potential IPO in London

The signage of cross-border fast fashion e-commerce company Shein at a garment factory in Guangzhou, in Chinas southern Guangdong Province, on July 18, 2022. (Jade Gao/AFP via Getty Images)

British politicians are urging the UK government to address their concerns before the Chinese fast-fashion giant Shein gets the green light to list on the London Stock Exchange.

These concerns include Shein’s alleged forced labor and data breach practices, exploitation of tariff loopholes, and connections with the Chinese Communist Party (CCP).

Founded in 2008 by Chris Xu, Shein is known for its wide range of ultra-cheap clothes and direct-to-consumer business model. The company leverages consumer data tracking and analysis to identify fashion trends. Shein now has a significant presence in markets across Europe, the United States, and Asia.

According to accounts filed with UK Companies House, Shein’s UK business achieved £1.1 billion (about $1.41 billion) in sales last year and a pre-tax profit of £12.2 million (about $15.6 million) over the 16 months ending on Dec. 31, 2022.

According to a U.S.-China Economic and Security Review Commission (USCC) report, Shein accounted for 50 percent of all fast fashion sales in the United States by November 2022, ahead of brands H&M and Zara, citing data from a 2023 report by Bloomberg Second Measure.

The USCC reported that the company has faced substantial accusations of poor product quality, labor malpractice, environmental damage, regulatory scrutiny, and copyright infringement.

Shein is reportedly negotiating to list on the London Stock Exchange after encountering regulatory obstacles from the U.S. Congress in its attempt to float in New York.

Lord David Alton of Liverpool told The Epoch Times in a May 29 email that he has “extensive” concerns regarding Shein’s efforts to launch its IPO in London. 

He mentioned that Shein’s business model allegedly uses Uyghur forced labor to make the ultra cheap prices possible, takes advantage of the tariff loopholes, and operates “an algorithm that is not only invasive but most likely undermines GDPR (General Data Protection Regulation) rules.”

Like other Chinese companies, Shein is required to collaborate closely with the CCP in matters of data and intelligence collection under the CCP’s Data Security Law (2021) and National Intelligence Law (2017).

Moreover, Lord Alton said in the email that Shein “legally cannot share the data they collect or disclose the extent of that collaboration with the UK or any UK regulator, including financial regulators in the City of London." 

Lord Alton said none of this is acceptable.

He believes it is a “tall order” for Chinese companies like Shein to “behave like any normal company operating in a democracy.”

“I have no doubt that if the Government asked for these reasonable requests, it would be rebuffed,” Lord Alton told The Epoch Times.

He also reminded the British government that allowing Shein to list on the London Stock Exchange would be “an endorsement of a morally questionable business model built off of the back of slave labor, data harvesting, and serving as a shop window for the Chinese Communist Party.”

Other UK parliamentarians share Lord Alton’s concerns.

Alicia Kearns, Conservative MP and chair of the Foreign Affairs Committee; Liam Byrne, Labour MP and chair of the Business and Trade Committee; Sarah Champion, chair of the Labour Special Committee on International Development; and Alistair Carmichael, Liberal Democrat MP and chair of the Uyghur All-Party Parliamentary Group have reportedly expressed concerns about Shein’s London listing.

The allegations of forced labor in Shein’s production were raised not only by politicians but also by human rights groups.

Megan Khoo, policy adviser for the human rights organization Hong Kong Watch, told The Epoch Times on May 30 that the UK should not give an opportunity to a Chinese company that has faced setbacks in the United States. 

“UK officials should investigate whether Shein’s supply chain involves forced labor and take appropriate action,” she said.

The deteriorating U.S.–China and UK–China relations are affecting companies like Shein and Temu, according to Yeh Yao-Yuan, a China expert and professor of international studies at St. Thomas University in the United States.

He told The Epoch Times that China is now in a dilemma because “on the one hand, it’s trying to expand market and consumer capacity, but on the other hand, it is maintaining strained international relations.”

Additionally, the United States has a “de minimis” threshold of $800, allowing goods valued below this amount to enter tax-free. U.S. lawmakers have proposed a new bill to fix the loophole. In the UK, the “de minimis” threshold is £135 (about $173).

Shein did not immediately respond to The Epoch Times’ request for comment.

The company’s website states, “SHEIN is committed to upholding high labor standards across our supply chain. We enforce a strict Code of Conduct for all suppliers, which is in compliance with local labor laws.”

The UK Parliament was officially dissolved on May 30 in preparation for the July 4 general election. Nevertheless, “candidates (of the new government) should promise to thoroughly investigate Shein’s supply chain issues,” Ms. Khoo said.

Lord Alton emphasized that whoever forms the next government should make it clear that Shein will not be able to list in London unless it commits to “keeping UK user data in the UK, shares its algorithm and data with regulators, commits to no longer utilizing tax loopholes and an audit by HMRC [His Majesty’s Revenue and Customs] to ensure it is fully tax compliant, and is open to cutting its links with the Chinese Communist Party.”

Terri Wu contributed to this report.