Members of the UK parliament’s Labour Party greenlit the country’s biggest ever stock market listing: the Chinese fashion firm Shein, it was revealed yesterday.
London’s win will be New York’s loss, brokers said. The amount of cash to be raised was estimated by analysts as 50 billion GBP, a record breaker.
The astonishingly fast-growing Chinese fashion firm was long said to be undecided whether its listing in the west would be in New York or London—but now seems to have made up its mind.
EXCESSIVE FEARMONGERING
The reason is obvious: an excessive anti-China mood is being stoked in the US in advance of the Biden-Trump rematch in November. Fearmongering is an easy vote-booster.
In such a negative atmosphere, London was clearly a better bet.
The UK ruling party’s finance chief, Jeremy Hunt, met Shein executive chairman Donald Tang earlier this year and gave him the hard sell on why UK would be a better choice than the US.
But Hunt may soon be out of work.
Yesterday, the news emerged that top Labour Party MPs had also met Shein staff, and given the go ahead. It is widely believed that Labour will win the UK election next month.
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FROM NANJING TO THE WORLD
Shein was founded in the southern city of Nanjing in 2012, but grew at enormous speed to become a hugely successful international on-line clothes seller.
It was hit by the usual barrage of accusations from the US, such as claims that its clothes were made from cotton picked by “slaves” from prison populations.
However, cotton-picking in China is largely mechanised—and researchers showed that it was actually the US which uses prisoners for cheap or unpaid labor.
HEAD OFFICE MOVED
Like TikTok and Pinduoduo (PDD), Shein has moved its head office out of China to avoid political attacks from the US. PDD’s HQ is in Ireland, while Tiktok has HQs in Los Angeles and Singapore. Shein’s is also in Singapore.
Parliamentary groups in the UK which receive funding from the US gamefully tried to echo Washington DC’s claims, but have been largely disregarded.
The London share market has been struggling and badly needs a win. Last year, UK semiconductor firm ARM opted to list in the US rather than the UK, and last month gambling firm Flutter moved its listing from London to New York.
FOUND THE HOLY GRAIL
Shein appears to have found the holy grail of businesses – it produces products that are so cheap as to be irresistible to customers, yet are priced so they still manage to make a profit for the company.
In other words, they’ve found the sweet spot between quality and price. Shein made more than US$1 billion profit in 2021, and by 2023 had doubled this to US$2 billion.
To avoid accusations that they are producing unwearable garments that are only worth throwing away, Shein points to its high number of repeat customers, and the re-sale operation it offers, in which clients can sell used items.
The UK still has to tread carefully – the Shein deal has not been signed yet. But if it goes ahead, it will increase the gulf between politics and business in the UK. The political classes follow the lead of Washington DC on issues such as China and Israel, while the business community tends to exercise independent thinking on international issues.