Fast-fashion brand Shein expressed interest last year in listing on the New York Stock Exchange (NYSE). But, having met some opposition from US politicians, including Republican Florida senator Marco Rubio, it has now reportedly turned its attention to London.
While this would be a boost for the London Stock Exchange (LSE), which has lost several organisations to other international exchanges over the last five years, it raises the question of why Shein has not been successful with its application to the NYSE, The Conversation reported.
Shein has gained a significant global market share in online fast fashion since launching in China in 2008. It found success accelerating the already lucrative fast-fashion business model to become an ultra-fast fashion retailer.
That Shein is the second most popular fashion retailer for American generation Z is unsurprising, given the vast choice of up to 10,000 new garments uploaded daily at significantly lower prices than fast-fashion competitors like Zara and H&M.
Yet those strategies that have enabled Shein’s international expansion are now likely hindering its application to the NYSE. The low cost of fast fashion in general has long been linked to potential labour exploitation, and the precariousness of outsourcing fashion production to the cheapest supplier within a global supply chain was evident during the pandemic. And as awareness of unethical and unsustainable practices in the wider industry grows, activists may yet have the power to disrupt Shein’s growth.
Swiss NGO Public Eye has reported on alleged exploitation at factories said to be used by Shein, which itself recently issued a comprehensive response saying it has made “extensive progress” in improving conditions. In the US, Rubio introduced a law in 2021 blocking imports made by Chinese Uyghur slave labour and has since ordered an investigation into Shein and fellow Chinese low-price retailer Temu to see if their goods fall foul of the law.
Climate emergency
The US is going further in regulating the fashion industry. In New York, the Fashion Sustainability and Social Accountability Act will, if passed, legislate that fashion and footwear brands with more than US$100 million (£79 million) in revenue must map 50% of their supply chain to ensure transparency. They will also have to develop plans to reduce their social and environmental impact.
Similarly, in 2019 the European Parliament declared a climate emergency, and the European Commission responded by developing the European Green Deal. This includes planned legislation forcing the fashion industry to address sustainability issues, meaning that by 2030 fashion and textiles will have to become more durable, repairable and recyclable. Businesses will also need to have strategies in place from the design process through to the end of life to maximise resources and avoid contributing to landfill.
French politicians are also “legislating to limit the excesses of ultra-fast fashion”, with a surcharge from 2025 of €5 (£4.29) per item, rising to €10 by 2030. This is recognition that ultra-fast and fast fashion does not only exploit labour, but also the environment. In being seen as disposable, fast fashion has been shown to encourage constant consumption.
While listing Shein on the LSE could improve the company’s respectability and profits, it could backfire for the brand in the long term. Shein could become more visible to a wider audience and with more understanding of sustainability and business practices that contribute to the climate emergency, activists could begin targeting shareholders and other organisations and people with connections to the company.
There is precedent for this – activists who targeted museums and galleries over their sponsorship from energy companies, as well as campus protests in the US and Europe calling for universities to divest from Israeli companies over its war in Gaza.
This trend of publicly criticising brands for exploitative or unethical practice has been levied at fast fashion retailers on social media for years. In particular, influencers who promote “fashion hauls” have been criticised for encouraging unsustainable fashion consumption.