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Speaker 2: Mag Have you ordered anything from Shane I imagine The
Speaker 2: answer is god no.
Speaker 1: Imagine like no, I have a guilty sha Former.
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Speaker 2: I'm fronting Laqua.
Speaker 1: I'm alegra Stratton Alecra.
Speaker 2: Have you ever ordered anything from the Chinese fast fashion
Speaker 2: giant shean.
Speaker 1: On thousand percent.
Speaker 2: No, I'm unsurprised.
Speaker 1: Actually no, I'm upset that you're unsurprised, but no, clearly
Speaker 1: clearly so I came across it obviously in the work
Speaker 1: we do on sustainability, because it has a very bad
Speaker 1: environmental impact. I think the algorithm is very interesting. So
Speaker 1: the idea that they can see really quickly what's popular
Speaker 1: and then they make more of those. So I think
Speaker 1: that is fascinating and obviously innovative, but it's being used
Speaker 1: to the wrong ends.
Speaker 2: So it's an interesting story because, on the one hand,
Speaker 2: if the listing does go ahead, then it has a
Speaker 2: possible valuation of fifty billion pounds, so it'd be big
Speaker 2: enough to quiet some of the doomsday chatter around the
Speaker 2: ukipl market. But then, as you say, there's ethical questions.
Speaker 1: Yes, and very very recently, a couple of years ago,
Speaker 1: the City of London was talking a lot about being
Speaker 1: the global center of green finance. So what does that mean, Well,
Speaker 1: it means a number of things, but including it is
Speaker 1: that we have regulations that are supposed to get companies
Speaker 1: to demonstrate their transitioning away from carbon intensive activities, which
Speaker 1: is I think would be a stretch for Shining, sorry,
Speaker 1: a stretch for Shin to demonstrate.
Speaker 2: Yeah, we're not sure how to pronounce it.
Speaker 1: So in today's episode, it's Shine from now on.
Speaker 2: In today's episode, we're going to talk about what it
Speaker 2: means for London now that it's inching closer to a
Speaker 2: listing with US opinion calmness to Andrew Felsched, who definitely
Speaker 2: knows how to pronounce it. She oversees consumer goods and
Speaker 2: the retail industry and Alvaret reporter and read Out newsletter
Speaker 2: writer as well, So thank you both for joining us.
Speaker 2: Andrew talk to us about She Shining, like how many
Speaker 2: clothes do they sell and make?
Speaker 3: They had failed last year of twenty three billion dollars
Speaker 3: and they said they want to increase that to sixty
Speaker 3: billion by twenty twenty five, so that you know, that
Speaker 3: would be sixty billion, would be ahead of Indetect, which
Speaker 3: is it's, you know the world's biggest sort of clothing retailer.
Speaker 3: So you know, it is very sizable.
Speaker 1: Into technics, is Zara and so on?
Speaker 3: Isn't it Bara? Yes, exactly, So I mean it's very sizable.
Speaker 3: It's not like a conventional retailer. It doesn't have shots,
Speaker 3: it doesn't have you know, warehouses here, and it picks
Speaker 3: things out see what people are wearing on social media.
Speaker 3: It comes them through its algorithms system, and that goes
Speaker 3: to five thousand suppliers in China and then the sin
Speaker 3: ship thing it ships things from China direct to consumers
Speaker 3: in the US and the UK. So I think the
Speaker 3: first question for investor is what exactly are you being
Speaker 3: asked to buy shares in this ica?
Speaker 2: Andrew, I'm on the website. So first of all, right,
Speaker 2: and I see, I mean they're telling me I can
Speaker 2: get a shean vacation woman's flower ensemble for a three
Speaker 2: pound forty nine. I mean, has it possible to make
Speaker 2: anything for three pounds?
Speaker 3: Well, they claim that their system is very efficient, and
Speaker 3: what will happen. They will they will only make one
Speaker 3: hundred to two hundred pieces of any item, and then
Speaker 3: if it proves popular lots of people like that flower ensemble,
Speaker 3: then they will decide to make more. And they claim
Speaker 3: that that is very efficient and that's the way they
Speaker 3: can keep prices down. Now British retailers have another view
Speaker 3: because these items which are you know, typically you just
Speaker 3: mentioned very cheap, they come direct from China. If they're
Speaker 3: a hundred, one hundred and thirty five pounds each, they're
Speaker 3: all in small packages. The beach one is under one
Speaker 3: hundred and thirty five pounds. It doesn't pay tax on
Speaker 3: that order, so that immediately it doesn't attract taxes. That
Speaker 3: immediately makes things chink, and all retailers make them authority
Speaker 3: of their product. Now in Asia might not necessarily China.
Speaker 3: Lots of moved out China, but they will bring those
Speaker 3: over and containers to UK distribution centers and then they
Speaker 3: will you know, get them out to consume homes or
Speaker 3: to their doors, so that they want that crack down
Speaker 3: on because you know, they're saying that that does make
Speaker 3: things cheaper.
Speaker 1: However, it's difficult for an incoming labor government, isn't it.
Speaker 1: We're on one hand, well not. On the one hand,
Speaker 1: you have a huge part of that party is interested
Speaker 1: in environmental protections and standards. Another part of it, overlapping
Speaker 1: but slightly different, is interested in workers' rights. But then
Speaker 1: there's that central core interested in all those things too.
Speaker 1: But they're wanting to demonstrate that the city of London
Speaker 1: is going to be back on its feet very quickly.
Speaker 1: So it's a bit of a headache for them a bit.
Speaker 3: Yeah.
Speaker 4: We have reporters or I reported with with colleagues that
Speaker 4: Labor is not going to block this, that they've had
Speaker 4: various meetings with she and FIRSU and DeVos or in
Speaker 4: London arranged by the London Stock Exchange, and they basically
Speaker 4: gave them assurances that they're not going to block it.
Speaker 4: So they have made their decision. The headline is that
Speaker 4: they are open to this because it's a big listing,
Speaker 4: but they are careful to add a certain number of caveats,
Speaker 4: I suppose. So you mentioned the sort of the concern
Speaker 4: over workers' rights, I mean some particularly concerning stories about
Speaker 4: basically slave labor in Shinjang, which she and has denied.
Speaker 4: Labor is saying that the benefit of she enlisting here
Speaker 4: would be that she and would then be subject to
Speaker 4: UK employment regulations, and so it's actually better to have
Speaker 4: a company like that being brought under UK regulation, And
Speaker 4: they want even more places listing in the UK so
Speaker 4: they can regulate them in line with British law. Essentially,
Speaker 4: I'm not really sure if that will wash with parts
Speaker 4: of the Labor Party. I mean you mention and the
Speaker 4: concern about environmental standards, which is a big concern with
Speaker 4: she and in fast fast fashion. But also you know,
Speaker 4: it's called the Labor Party, it's the it's the it's
Speaker 4: the party of organized Labor of workers. That the clues
Speaker 4: in the name Angela Rayner is making a big part
Speaker 4: of her sort of mission as Deputy Prime Minister shoring
Speaker 4: up workers rights. There are loads of concerns about that,
Speaker 4: but there's also, i think the more complicated thing about
Speaker 4: their Securonomics.
Speaker 1: Offer.
Speaker 4: So they basically have made this pitch that their economic
Speaker 4: model will be one that shores up UK security at home,
Speaker 4: so not having to outsource things like energy to foreign pars,
Speaker 4: but then also just sort of protecting bits of British
Speaker 4: industry from Chinese influence and so she and it was
Speaker 4: sort of originated in China, It's not based out of Shanghai,
Speaker 4: but this is sort of essentially putting a big Chinese
Speaker 4: company on the London Stock Exchange. Their concerns there as well.
Speaker 2: But al I mean, I feel like it's difficult to regulate, right,
Speaker 2: I mean if they don't have their employees here, if
Speaker 2: the supply chains are here, I don't see how any regulator,
Speaker 2: you know, based in the UK would be able to
Speaker 2: give workers' rights to someone who abroad. And the SEC
Speaker 2: also said that it wasn't too keen to have them
Speaker 2: on because of some of these concerns.
Speaker 1: But also think of the business model, right. The reason
Speaker 1: why that that fetching whatever that number is you're looking
Speaker 1: online and probably going to buy is three pounds forty with.
Speaker 2: The flower ensemble.
Speaker 1: As soon as you start to regulate, then you're going
Speaker 1: to push up the cost of various different bits of
Speaker 1: their model, so you're going to break the way that
Speaker 1: they make money.
Speaker 2: But I wonder whether the Labor Party feel like there's
Speaker 2: so much under pressure because they want to show that
Speaker 2: their business friend they almost at any cost.
Speaker 4: Yeah exactly. I mean, as you say, the minute you
Speaker 4: start probing that line, you think, how does that really work?
Speaker 4: You know, you're not necessarily going to be based in
Speaker 4: the UK, you're just listing here. But that's kind of
Speaker 4: their argument that they have to make really to keep
Speaker 4: parts of the party happy. But they've clearly just made
Speaker 4: this calculation that they don't want a big headline Labor
Speaker 4: blocks the possible biggest listing ever in London on the
Speaker 4: London Stock Exchange, that they are just they just want
Speaker 4: to be seen to be pro business, pro growth. So
Speaker 4: much of actually what they want to do in government
Speaker 4: is reliant on private sector investment because they don't feel
Speaker 4: like they have much money themselves. So many of their
Speaker 4: models are sort of government puts in one point hoping
Speaker 4: that you get four point from the private sector. So
Speaker 4: they are really reliant on just vibes and that message
Speaker 4: to the private sector, hoping that they can make up
Speaker 4: the difference where they're not investing, the private sector can,
Speaker 4: and they're putting that basically above all those other concerns.
Speaker 1: Andrew, you wrote that you know London needs to be careful.
Speaker 1: It doesn't well, it doesn't become the sloppy seconds to
Speaker 1: New York. Does it actually I mean, you're right instinctively,
Speaker 1: but does it actually matter. There are people commentators out
Speaker 1: there that we don't read as much as we read you, Andrea,
Speaker 1: but they are saying, you know, London needs to be
Speaker 1: careful about about Alva's point about vibes, to be careful
Speaker 1: about the sort of id it's presenting to the world
Speaker 1: by being the place that is happy to have this listing.
Speaker 3: I totally agree. I think that is the bigger danger.
Speaker 3: Whenever you look at this, there is risk with this company,
Speaker 3: and to say that, you know, we want something that
Speaker 3: is this risky, I don't think sends a great message
Speaker 3: that said everything got to prime. So what you've got
Speaker 3: with san is you've got these risks that you've also
Speaker 3: got a high valuation. We don't have all the numbers,
Speaker 3: you know, I had to make a lot of assumption
Speaker 3: to figure out what it would work, but I got
Speaker 3: to basically a similar rating to Indetect. And when you think,
Speaker 3: you know in Detect is you know the biggest clothing retailer,
Speaker 3: it's you know, it's aren't its track record for many
Speaker 3: years doing phenomenally well. Zara, and you've got she In, which,
Speaker 3: as we've discussed, has all these issues, is coming in
Speaker 3: at the same value toation. Okay, so we've blund and
Speaker 3: wants it. It's got to be prime to the fact
Speaker 3: that you make invested comfortable with the risk.
Speaker 1: I just want one more from me, but it's probably
Speaker 1: a bit niche inter Tech is interesting because with Zara
Speaker 1: you can actually see their price point is it's not
Speaker 1: as low as she In, but it is it is
Speaker 1: not extortionate either. But what you're seeing is they're putting
Speaker 1: some of their money, not enough for some campaigners, but
Speaker 1: some of their money into innovation to bring in the
Speaker 1: fabrics that are lower impact on the environment. So you
Speaker 1: know there is that there are actually these models out there.
Speaker 1: The debate is can you actually have environmental fast fashion?
Speaker 1: Like is it an oxymoron?
Speaker 4: Yes?
Speaker 3: Exactly that they are all trying, not just in Detect,
Speaker 3: I mean H and M. It really has been doing
Speaker 3: a lot on this big years it was it's put
Speaker 3: you know, sustainability at the heart of the business model.
Speaker 3: Even Primart. We think Primar is very fast fashion. They're
Speaker 3: doing a lot with recycled fabrics and.
Speaker 1: You know they are all is possible.
Speaker 3: Basically it's possible. I mean, you're not going to get
Speaker 3: a zero you know, impact from pass fashion. But the
Speaker 3: more you can get people to just wear things more
Speaker 3: no handt minimized the impact. And let's forget even luxury
Speaker 3: isn't risk free. You know, a lot of luxury you've
Speaker 3: got things would like the leather, the metal class for
Speaker 3: Kashma all. Yeah, all of these things have environmental.
Speaker 4: I think the big caveat and all of this is
Speaker 4: that even though I've said Labor has given she in
Speaker 4: reassurances that they won't block this, they caveat that was
Speaker 4: saying that they haven't done their full due diligence yet.
Speaker 4: And so even though she has sort of begun the
Speaker 4: process of listing in London, we know that that won't
Speaker 4: happen until the end of the summer, which means that
Speaker 4: even though we're in a general election campaign, Parliament will
Speaker 4: be back before this can happen. And there are Labor
Speaker 4: backbenchers people like Liam Burn who have concerns about this
Speaker 4: and who do want to have parliamentary scrutiny if she
Speaker 4: in before it can list in London. So I don't
Speaker 4: think that this is a done deal by any means.
Speaker 4: We can see the direction of travel from the Labor
Speaker 4: government in terms of them just wanting this big listing.
Speaker 4: But what will happen?
Speaker 1: Who is an election? Maybe Jeremy Hunt.
Speaker 2: But the thing is that we don't know how bad,
Speaker 2: how actually how bad for a lack of a better term,
Speaker 2: Shean actually is right. I mean Primark is maybe the
Speaker 2: closest we could compare her to. I mean they went
Speaker 2: through like factory collapses. This is not only not environmentally,
Speaker 2: this is you know, could we could look at child labor.
Speaker 2: Do we have any of those facts of how it
Speaker 2: actually operates or is that what labor is waiting for?
Speaker 4: Well, definitely they would say that they've had a lot
Speaker 4: of questions in their meetings with Sheen. But it's interesting
Speaker 4: that they they have mentioned a lot of the lines
Speaker 4: that I heard from Andrea there, you know that pitch
Speaker 4: that they're actually not as environmentally bad as they say
Speaker 4: they are because they aren't built, they aren't making all
Speaker 4: those clothes right away. They're seeing which ones perform. Well,
Speaker 4: they commission a lot, make us more, Yeah, exactly. And
Speaker 4: you know, so they've been kind of making that pitch
Speaker 4: to labor. Labor signs kind of persuaded by it, and
Speaker 4: maybe because they're hearing what they want to hear. But
Speaker 4: definitely there is that big caveat they haven't their full
Speaker 4: due diligence. You know, there have been some very concerning
Speaker 4: stories of actually and in multiple directions. So I don't
Speaker 4: think that this is a done deal. And I especially
Speaker 4: think the Conservatives, if they are in opposition, there's so
Speaker 4: much sort of China skepticism. We saw what happened over Huawei.
Speaker 4: I think you could really see this crystallizing as a
Speaker 4: sort of early issue the next government.
Speaker 1: Nigel Farage is against it.
Speaker 2: But this is also it comes on the back of
Speaker 2: you know, maybe the last ten to fifteen years loads
Speaker 2: of listings from Russia. I mean, we had all the
Speaker 2: medals right companies being listed here and that then went
Speaker 2: on to bagfire.
Speaker 1: So this is this is the thing rand I mean
Speaker 1: that that you know, if you were to marshall Defense,
Speaker 1: you would say that many companies listed in London have
Speaker 1: not fantastic environmental standards, but we're you know, we have
Speaker 1: as you say, mining, we have lots of oil and
Speaker 1: gas and so on. What against that is actually a
Speaker 1: lot of the regulations that have come in the last
Speaker 1: couple of years have expected and put expectations on them
Speaker 1: to do transition plans and to be demonstrating that they
Speaker 1: have maps and understand their carbon emissions.
Speaker 2: But I think, and I would argue and Andrew, it
Speaker 2: probably the best place to answer this that you can
Speaker 2: have a company that pollutes because of fossil fuel, which
Speaker 2: is maybe different to child labor, which we don't know
Speaker 2: if that's happening, Andrew. But how difficult is it on
Speaker 2: such a large I mean, if they're valued at fifty
Speaker 2: billion or thereabouts, this is a massive company. Supply chains
Speaker 2: are probably all over the world. A lot of them
Speaker 2: are ear in China, So how difficult is it to
Speaker 2: have that due diligence to understand where they do them.
Speaker 3: One way to maybe think about that is they've got
Speaker 3: they talk about five thousand supplies. A high street retailer
Speaker 3: in the UK would have hundreds of suppliers. So immediately
Speaker 3: you've gotten bigger. Now she And say that last year
Speaker 3: they audited ninety five percent of their suppliers and only
Speaker 3: a very small amount were found to not be compliant
Speaker 3: and they stopped working with those. So that's all very good,
Speaker 3: But I think I think it's just scale that thousands hundreds.
Speaker 3: So if you've got a high street retail of hundreds
Speaker 3: of suppliers, they all have like a lot of auditors
Speaker 3: on the ground. So for five thousand suppliers, you need
Speaker 3: even more auditors on the ground. I think she AND's
Speaker 3: got to come out and show what it's doing in
Speaker 3: its supply chain, show that how it's auditing, how often
Speaker 3: it's auditing, how many auditors it've got, what they find
Speaker 3: and what they do if they find something they don't like,
Speaker 3: and how they're getting rid of it. I think it
Speaker 3: got it's really got to explain that, you know, in
Speaker 3: great detail, and it will you know, if it lists,
Speaker 3: it will have a prospectus, and it's really got to
Speaker 3: set that out as much as it can.
Speaker 1: You're right, Andrew, that's what's going to be said if
Speaker 1: we get a labor government, and it's a labor government
Speaker 1: that says it puts impact on the environment front and
Speaker 1: center and they made a great deal of this in
Speaker 1: their in their perspectives so far. It will be interesting
Speaker 1: to see in reality what that means, how much you're
Speaker 1: actually going to get, you know, rather than an assertion,
Speaker 1: don't worry, we checked ninety five percent of our supplies
Speaker 1: and we kick the ones out that we didn't like.
Speaker 1: They're actually gonna have to demonstrate that. They're going to
Speaker 1: have to demonstrate that they've carbon mapped every bit of
Speaker 1: their business. They're gonna have to demonstrate Alva's point in
Speaker 1: numbers rather than in assertions that actually, because they don't
Speaker 1: waste so much, they're lower carbon in that way. You know,
Speaker 1: these do sound like, you know, benign practices, but they'll
Speaker 1: have to show that rather than assert it, and that
Speaker 1: will be such an interesting, you know test in detail
Speaker 1: of the Labor government's commitment to the environment and climate.
Speaker 2: But if for ethical reasons, Labor says no, do they
Speaker 2: have enough support from the business community to be able
Speaker 2: to still show that they're business friendly and able to
Speaker 2: attract capital to the UK.
Speaker 4: Oh it's hard to know. I mean, I get the
Speaker 4: impression that business leaders are quite impressed by Rachel Reeves
Speaker 4: and here Starmer, she's done a lot of work to
Speaker 4: you know, have lots and lots of business breakfasts around
Speaker 4: here in the city for the past few years. Jonathan
Speaker 4: Reynolds as well, the Shadow Business Secretary, the person who
Speaker 4: has been meeting with she, and he's done a lot
Speaker 4: of work on that. But I get the impression from
Speaker 4: speaking to colleagues who speak to business leaders all the
Speaker 4: time that they're less sure about Angela Rayner that we
Speaker 4: were talking about vibes that she has a different vibe
Speaker 4: in terms of her relationship for image towards business. And
Speaker 4: she's the person, of course, the sort of figurehead of
Speaker 4: their workers' rights reforms, and so I think that it
Speaker 4: will be interesting. This is just one example of where
Speaker 4: all these tensions that we said workers writes the environment
Speaker 4: but then being pro business I think might come to
Speaker 4: a head in government. We've seen it on that so
Speaker 4: called new deal for working people their work rights reforms.
Speaker 4: Different people in the shadow cabinet take a different view
Speaker 4: on that. Some people have been pushing for that business consultation,
Speaker 4: other people don't want it. I don't think she and
Speaker 4: has been discussed by everyone in the shadow cabinet. We
Speaker 4: haven't necessarily seen Ed Milliband and Angela Rayn away in
Speaker 4: with a view. Yet that could happen in government.
Speaker 2: So you know, given our understanding of how this Labor
Speaker 2: Party works, who would make the ultimate decision on whether
Speaker 2: the IP goes ahead.
Speaker 4: Well, interestingly, it would be I mean it should be
Speaker 4: Ker Starmer, and he's unpredictable in this way. I mean,
Speaker 4: on a lot, you would expect the pro business side
Speaker 4: to win, so that'd be Rachel Reeves, Jonathan Reynolds. They
Speaker 4: should win out but they but they aren't winning on everything.
Speaker 4: On things like workers' rights. Angela Rayner has been winning
Speaker 4: those on those arguments. We've seen it in recent weeks,
Speaker 4: so I don't think it's as clear cut. And that's actually,
Speaker 4: you know, the bigger fascination. If we do get a
Speaker 4: labor government, Ker Starmer will call the shots, and we
Speaker 4: don't know exactly what to expect from him. You know,
Speaker 4: sometimes we think we know and then he sides with
Speaker 4: other people and his party doesn't.
Speaker 1: It also depend on where they're at in the cycle
Speaker 1: and what they've just been beaten up for. I mean,
Speaker 1: if I think about when they ditch the twenty eight
Speaker 1: billion climate pledge for low carbon tech that they would
Speaker 1: invest twenty eight billion, and then quite soon after they
Speaker 1: were being quite protective of the workers' rights program because
Speaker 1: I think you're trying to kind of plicate different parts
Speaker 1: of the party at any given time, aren't you. Yeah.
Speaker 4: And also I think it depends on whether it's actually
Speaker 4: about money or not, Like they are quite clear, like
Speaker 4: to the twenty eight billion if they want no uncosted,
Speaker 4: manifested commitments, and they feel like they've have to ditch that,
Speaker 4: But on other things where the money is not so involved,
Speaker 4: they feel like they can be more radical, and that's
Speaker 4: where Kirstarmer tends to come down.
Speaker 2: So what kind of timeline are we looking at for Sheen?
Speaker 4: What happens We're looking post election, We're looking at what
Speaker 4: happens when Parliament comes back, what kind of scrutiny they
Speaker 4: instigate of Sheen and then and when they plan to
Speaker 4: sell their shares towards the end of the summer, if
Speaker 4: they managed to get to that point.
Speaker 2: Aw Well, Andrea, thank you so much, thanks for listening
Speaker 2: to this week's In the City from Bloomberg. This episode
Speaker 2: was hosted by me Franz and LaQuan and Alecra Strackson.
Speaker 2: It was produced by Summersaudi production support and sound designed
Speaker 2: by Moses and dam Brendon. Francis Newman is our executive producer.
Speaker 2: Sage Bauman is head of podcast special Thanks to Andre
Speaker 2: Felsted and Alvarey. Please subscribe, rate, and review wherever you
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