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The chairman of a coalition of MPs has written to the heads of the UK's financial watchdog and the London stock exchange to raise concerns about Shein's fast-track team ahead of the proposed IPO.
Liam Byrne, chairman of the business and commerce select committee, said MPs may question the credibility of Shein's offer after hearing “conflicting evidence” from the company this week as part of a wider investigation into workplace rights.
Byrne wrote to Nikhil Rathi, chief executive of the Financial Conduct Authority, and Dame Julia Hoggett, head of the London Stock Exchange, that the committee “struggled to get clear answers from Shein on their business activities”.
He asked both organizations for more information and checks on inventory systems after a senior Shein employee refused to answer several questions about whether the cotton it uses in some of its products came from China's Xinjiang region, an area linked to allegations of forced labor. , with plans to follow the series in London this year.
Shein, which was founded in China and is based in Singapore, uses thousands of Chinese manufacturers to make their clothes and then sells them at very low prices to the world.
It has expanded since the Covid-19 pandemic but also faces allegations of poor performance in its supply chain. The company also said it has a “zero tolerance policy” regarding forced labor and that most of the cotton is understood to come from Australia and the US.
The FCA said in response to Byrne's letter: “We look forward to explaining our role in our response to the committee.”
Rathi he told the Financial Times last month that the FCA's decision on whether to authorize a company to list in London would depend only on its disclosures, not “every aspect of the company's conduct”.
Without speaking directly to Shein, Rathi said it was “not unusual” for UK-listed companies to carry global legal risks and “the important thing is that they disclose it, investors understand and can appreciate that risk”.
Before a company is listed in the UK, the FCA checks that the prospectus contains all the information it must, but does not guarantee the accuracy of this information.
Any inaccuracies or omissions discovered subsequently may lead to investment charges and FCA enforcement action.
Rathi is accompanying UK chancellor Rachel Reeves on a three-day visit to China this weekend and could discuss Shein's list of plans with his counterparts in Beijing.
David Schwimmer, chief executive of LSEG, which owns the London Stock Exchange, is also part of the delegation.
Byrne said he was “deeply troubled by the lack of clear and open answers to very simple, basic questions” from Shein about the supply chain in his letter to Hoggett.
He asked if LSEG was able to verify “the statements of the firms that want to list, regarding their protection against the use of forced labor in their products”.
Writing to Rathi, he wanted to know what checks are in place to ensure companies disclose legal risks to prospective investors in their listing documents.
LSEG and Shein did not immediately respond to a request for comment.