Politicians have misread the room over Shein
Growth-hungry MPs are welcoming Shein’s big bucks plans to list on the London Stock Exchange, but there’s growing unease among the people who really matter – investors, says Simon Neville
Whenever the City and Westminster clash, it is usually because the former wants the latter to be more lenient.
The cries of “you’re stifling competition!” and “but what about our bonuses!” shrill out from all quarters of the Square Mile.
So, spare a thought for poor fast-fashion online retailer Shein, over whom we are seeing this age-old trope play out in reverse.
Knee-deep in the election campaign, politicians are desperate to tell us how their vision for the future is built on growing the economy.
Shein’s multi-billion pound planned listing on the London Stock Exchange is just the kind of cause they can support.
It has seen both Labour and the Conservatives have met Shein bosses and appeared to welcome their plans, with both main parties assuming a strategy of supporting UK investment must surely be what all sides want.
The UK is open for business, they will shout, hoping that financial institutions and the patriotic British media will echo their rallying call.
But, despite being potentially the biggest London listing in over a decade, the response from the City and the press has been muted, at best.
Institutional investors are worried about corporate governance issues for the Singapore-based, Chinese business.
They are concerned that issues facing Shein in the US – where it was all but banned from listing there because of the deterioration of US-China relations – will be pursued in the UK should the next Government take an interest.
The US Congress already criticised tax avoidance strategies used by Shein, along with allegations relating to claims that Uyghur forced labour is used to make some of the clothes it sells, which the company denies.
And now the EU is starting to crack down on fast fashion, with an eye to sustainability in an increasingly unsustainable sector.
All of this leaves Shein in a difficult position where they have the support of the politicians but a growing unease among the people who matter – investors.
The question is – how did the politician parties get the mood music so very wrong?
Calling a general election at the same time Shein appeared finally ready to pull the trigger on a UK listing certainly meant the need to speak positively about a new FTSE entrant.
It is a brave politician to raise concerns without the risk of being told they are “talking the country down”.
And, certainly, Shein has been canny enough – or bruised elsewhere – to know building relationships with the political class is key for any successful listing.
Reports even suggest the board approached former Chancellor Sajid Javid as a possible non-executive for exactly this purpose, and meetings between executives and the Government have been gathering pace.
Shein was also smart in signing up as a member of the British Retail Consortium – the trade body with arguably the most influence in the corridors of power – meaning that in return for the membership fee, the organisation is less likely to speak out.
But that hasn’t stopped the media flagging the unease of other organisations, including the British Fashion Council, which has warned about Shein’s corporate governance issues.
Journalists love a good clash and it would not surprise me if more organisations come out of the woodwork to call into question some of Shein’s practices.
All of this means the listing may end up a damp squib and the politicians who so wholeheartedly gave their support may be looking at ways to row back once the election is over.
If the next Government do decide to take an interest, they will have to consider whether the collateral damage to the City’s reputation for an attack on Shein is worth it, or whether they want to side with a company that has question marks galore.
Either way, the stars have aligned in a unique manner in which the politicians will be hoping Shein can outshine their critics and justify their support.
Simon Neville is media strategy and content director at SEC Newgate