Shein files for Hong Kong listing as it turns the screw on Reeves

Yahoo

4 days ago

Shein has quietly filed papers to float on the Hong Kong stock exchange as it seeks to pressure London into approving a listing.
The fast fashion giant, which was founded in China but is based in Singapore, reportedly filed a prospectus for an initial public offering (IPO) last week.
Shein submitted papers for an IPO in London some 18 months ago but the process has been left in limbo by its failure to secure regulatory approval.
The company has faced allegations of human rights abuses and it faces a crackdown on its business model in the EU and the US.
A decision to list in Hong Kong would be seen as an embarrassment for Rachel Reeves, the Chancellor, who flew to Beijing in January for a three-day trip aimed at securing investment in the UK.
The trip came as Shein faced questions about its potential £50bn London listing amid criticism from MPs about the lack of transparency around the company's supply chain.
Reports began to emerge last month that Shein had started to go cold on plans for a blockbuster London market debut.
While it did secure the go-ahead from the Financial Conduct Authority (FCA) for a version of its listing plans, this was snubbed by Chinese regulators.
Shein had already abandoned plans earlier in the year for a UK warehouse, despite dispatching a team of representatives to the East Midlands to visit potential locations, with the company believed to have been considering sites as large as 600,000 sq ft.
The company's filing in Hong Kong is an attempt to bounce UK regulators into approving its London listing. London would still be Shein's preferred destination for a listing if the FCA approved the China Securities Regulatory Commission's version of its prospectus, sources told the Financial Times.
It comes as Shein was hit with a High Court lawsuit in June over claims the online shopping giant illegally dodged taxes in the UK.
The retailer was alleged to have committed customs and VAT fraud when flying parcels over from China to UK customers amid rocketing sales of cheap clothes. Shein denied the claims.
It has faced criticism over its use of a tax loophole in Britain, which rivals claim has allowed it to undercut their prices and win over scores of new shoppers.
The rule has recently come under fresh scrutiny, with the Chancellor pledging in April to review the loophole.
The issue centres on the way online giants such as Shein operate compared to traditional retailers.
Typically, retailers ship clothes in bulk into UK warehouses, paying all the relevant duties at the border. However, Shein says it only makes items when people order them, which are then flown directly to customers, meaning those packages do not often incur customs charges.
Under the de minimis rule, which is still in place, products worth less than £135 are exempt from UK import duties.
Over recent years, rivals have become increasingly vocal over their frustration with the loophole, with the leaders of companies including Argos, Currys and Primark criticising the practice.
Shein declined to comment.
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