There are, in fairness, plenty of reasons why the City might be reluctant to embrace the Chinese fast-fashion giant Shein. Its disposable fashion ravages the environment; it encourages rampant consumerism; it has admitted to finding child labour in its supply chain. Here’s the problem, however. The London stock market is in such a dire state that it can no longer afford to be picky – and if it turns this one down it will condemn itself to irrelevance.
According to reports today, the Financial Conduct Authority is taking longer than usual to approve Shein’s IPO in London, and it is looking into its supply chain after an advocacy group for China’s Uyghur population questioned whether it met the standards the City is meant to apply to companies floating their shares. The UK’s independent anti-slavery commissioner has already raised questions. Those are serious concerns, and clearly the FCA needs to take them seriously, especially as any decision to allow the listing to go ahead could well be challenged in court.
The trouble is, can London afford to start being picky? The stock market is in a terrible state. The latest figures out this week showed that the City was trailing frontier markets such as Oman and Malaysia for the number of new listings this year. Only a dozen companies have floated so far in 2024, with the largest of them raising a mere £150 million. London did not have a single IPO in the Top 100 globally. For what is meant to be one of the top five stock markets in the world, sustaining a major financial centre, that is a dismal record. Shein may have some question marks around it, but it is at least a major business. It has global sales running into the billions, it is growing at 50 per cent annually, it has a brand that has come from nowhere to global recognition, and it is expected to be valued at close to £50 billion, double the value of Tesco. It is a significant business, and one likely to deliver far better returns than most of the tired old conglomerates on the FTSE-100.
It is perfectly acceptable for the London regulators to turn down Shein, but if it does so, it also needs to strip away the layers and layers of cumbersome regulations that over the last 30 years have crushed the stock market. The City needs to turn itself into the easiest place in the world to float an expanding business, and attract IPOs globally. If it doesn’t, , then turning down Shein is simply condemning the City to global irrelevance.
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