Starmer Plans to Leave Scrutiny of Shein IPO to UK Regulator

The UK government plans to leave scrutiny of Shein’s pursuit of a stock listing in London to the country’s financial regulator, sparing the Chinese fast-fashion retailer the sort of in-depth review of its employment practices that some in the Labour Party want.

Ministers intend to take a hands-off approach to the possible public offering on the London Stock Exchange, believing that the Financial Conduct Authority has robust enough processes to assess any concerns about labor practices in Shein’s operations and supply chain, according to people familiar with the matter who spoke on condition of anonymity about government thinking. Shein has faced allegations — which it denies — of using cotton tied to forced labor in the Chinese region of Xinjiang.

Shein’s executive chairman, Donald Tang met with ministers last month, Bloomberg has previously reported. While a listing is subject to regulatory approvals in China and the UK, it’s usual practice for the British government not to interfere in the domestic process. Nevertheless, several lawmakers have called on the new Labour administration to strengthen its scrutiny of Shein.

“Decisions on whether a firm can list in the UK are taken solely by the Financial Conduct Authority as the independent regulator for the listing rules,” the Treasury said in an emailed statement. Shein didn’t immediately respond to a request for comment, and in the past has said it has “zero tolerance” for the practice of forced labour. The FCA and the London Stock Exchange Group both declined to comment.

On paper, a listing that could value Shein at about £50 billion ($65 billion) is a prize worth having for London. It would be the capital’s biggest such share sale in more than a decade, putting boosters under Chancellor of the Exchequer Rachel Reeves’ stated plan to “revolutionise” capital markets in Britain and revive flagging listings activity. But there’s also political peril for Prime Minister Keir Starmer, whose new Labour government has made a virtue of strengthening workers’ rights domestically.

“It’s essential that the party of labour doesn’t forget about labour rights,” Liam Byrne, a Labour Member of Parliament and chair of the House of Commons Business and Trade Committee, told Bloomberg. “It would be strange indeed if we delivered bold, landmark new laws with the Employment Rights Bill and then neglected to act on forced labour globally.”

The government last month introduced the bill referenced by Byrne to Parliament. It paves the way for 28 changes to UK employment rights, including protections against unfair dismissal, improved access to statutory sick pay and payment for shifts canceled at short notice.

Byrne called for the government to strengthen its modern slavery act to protect UK consumers against the risk of forced labour being used to help make products imported into Britain. Shein’s UK sales soared to £1.55 billion last year.

“We can’t simply leave regulators to deal with challenges like forced labor on their own,” Byrne said. “We need to equip sentries with the right laws to protect consumers and investors and contribute to the battle to improve standards around the world.”

The FCA does not carry out in-depth investigations of a company’s labour practices, particularly for firms based abroad. Instead, the regulator typically relies on assurances that have been provided by the company.

Shein earlier this year switched its attention to London, confidentially filing papers for a potential initial public offering in London after an earlier plan to list in the US was held up by regulators.

Despite several UK lawmakers, including Byrne, expressing public concern about a listing, the government believes that if Shein is listed in London it will be subject to UK rules on modern slavery, people familiar with the matter said. Moreover, ministers feel that a fast fashion company does not pose the same potential security risk to Britain as a Chinese tech business. The company was founded in China but is now based in Singapore.

When asked last month about concerns surrounding a potential Shein listing, Starmer told Bloomberg Television that while he wouldn’t comment on individual companies, “high standards do matter to us.”

“We’ll be looking at any issue that goes to high standards, with a particular feature on the rights of the workforce,” he said.

By Ellen Milligan