A US congressman has demanded that Shein, a prominent Chinese online fashion brand, furnish evidence proving the absence of forced labor in the production of its clothing items, specifically T-shirts and sweaters.
This call from US congressional members follows recent reports that Shein has filed for an initial public offering (IPO) with the US Securities and Exchange Commission (SEC) to debut on the New York Stock Exchange in 2024. Although the IPO’s value remains undisclosed by Shein, reports from Bloomberg News in early November indicated the company’s aim to raise a staggering $90 billion through this IPO.
Founded in 2012, Shein has endeavored to pursue a US exchange IPO for approximately three years, navigating obstacles including diplomatic tensions between China and the United States. The company has faced accusations of utilizing forced labor, particularly from Uyghurs, to manufacture inexpensive clothing and household products.
The bulk of criticism revolves around Shein’s potential use of contract manufacturers situated in China’s Xinjiang province, an area where several governments accuse China of human rights abuses against Uyghur and other Muslim minorities, allegations consistently refuted by China.
Prior to SEC approval for Shein’s IPO on the US stock market, the company must substantiate the transparency of its supply chain to address these concerns.
Democratic House of Representatives member Jennifer Wexton emphasized on November 28th that, “For Shein to pursue a US stock market IPO, it is imperative for the company to assure American consumers that their products are free from forced labor sources.”
Earlier this year, Wexton led Congress members in urging the SEC to halt Shein’s IPO until the company could substantiate the absence of forced labor within its supply chain. Additionally, representatives from 16 US states, including Republicans, urged the SEC to investigate Shein’s accounting practices.
Despite controversies, Shein has gained immense popularity as an affordable online fashion brand, with analysts estimating its sales surpassing those of Zara and H&M in the US market. Furthermore, in 2022, Shein announced plans to establish distribution centers in the US, Canada, and Europe to bolster sales, reduce shipping times, and expand production in regions like Brazil, Turkey, and India.