Shein’s potential listing could be a game-changer for the London Stock Exchange, which has seen a rise in companies choosing US markets for their IPOs.
According to a report from Sky News, Shein is reportedly on the brink of confidentially submitting an initial public offering (IPO) prospectus to the Financial Conduct Authority (FCA) in London. Should this materialise, it would mark one of the most substantial IPO launches in the UK stock market in recent years.
In addition, Shein has maintained secrecy surrounding most details regarding its forthcoming public debut. However, if the reports hold, the company, purportedly valued at approximately £50 billion (€58.7 billion), could commence public trading as early as summer or early autumn.
Shein redirected its focus to the UK stock market following a stalling of its efforts to go public in the US, prompted by objections from American politicians. Concerns were raised regarding anti-competitive practices, potential national security risks, and allegations of utilising forced labour in product manufacturing. Additionally, Shein faces legal action from competitor Temu, who has filed a lawsuit alleging anti-competitive behaviour.
Furthermore, regarding the proposed UK listing, even upon filing the prospectus, Shein’s listing in the UK is not guaranteed. Approval from the UK’s listing authorities is still pending, determining whether the IPO will proceed in the UK.
Thus, should Shein’s IPO proceed, it can potentially inject renewed vitality into the London Stock Exchange (LSE). In recent months, the LSE has witnessed several companies opt for moves to the US stock market, including Flutter Entertainment, Arm Holdings, and Tui.
The EU has recently indicated a potential cessation of tax breaks for Shein and other discount online retailers like Temu, encompassing an import tax exemption. Previously, this tax break facilitated the waiving of customs duties and checks for parcels entering the EU from abroad, provided their total value remained under €150.
The exemption has proven pivotal for Shein and Temu in sustaining their ability to offer goods at significant discounts compared to their European counterparts. Nonetheless, it also presents a particular risk, as it complicates the process of ensuring compliance with EU regulations regarding the contents and origin of parcels.
Allegations of Anti-competitive Tactics and Labor Exploitation Surround Shein
In a recent lawsuit, Temu alleges Shein’s use of anti-competitive practices. These include pressuring manufacturers into signing exclusive agreements, filing unjustified copyright infringement notices, and threatening Temu’s vendors.
Beyond anti-competitive tactics, Shein faces accusations of design theft from small businesses and creators. Knitwear designer Bailey Prado claims Shein copied her entire life’s work.
According to Dazed, Bailey Prado discovered Shein’s alleged plagiarism through an Instagram follower. The follower sent Prado a screenshot of a design they recognized as Prado’s, leading her to find a whole collection of Shein garments replicating her work.
“I went in expecting a single knockoff, but my designs kept jumping out as I browsed Shein’s new arrivals. The shock was paralyzing. Each piece I recognized felt like a gut punch. It was impossible to believe what I was seeing,” she added.
Shein has drawn scrutiny from U.S. authorities for its cotton-sourcing practices under the Uyghur Forced Labor Prevention Act (UFLPA). The UFLPA restricts goods suspected of being produced with forced labor in China’s Xinjiang region, where the Uyghur Muslim community faces human rights concerns. The U.S. has blacklisted several Chinese companies for failing to comply with the UFLPA.
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