Could forced labour claims unravel Shein’s plans for expansion on NYSE?

US senators have called for increased transparency in Shein’s supply chain, threatening prospects of it getting listed on the US stock exchange.

A group of bipartisan US senators have demanded that the US watchdog the Securities and Exchange Commission force the fast fashion giant to independently certify its products do not use Uyghur forced labour.

The move attempts to halt Shein’s attempts to register as an initial public offering (IPO) until it can prove its supply chains are free of forced labour. 

The letter, which was signed by 23 Democrat and Republican senators, demands that the SEC independently verifies that the company does not use Uyghur forced labour, as a condition of being registered to issue securities in the United States.

The senators accused Shein of “utilising underpaid labour in its supplier factories and violating human rights”.

It continued: “SHEIN’s growth is attributed to a business model that harvests vast amounts of consumer data using complex algorithms and manipulates an enormous supply chain across China to manufacture goods rapidly to meet consumer demand.”

Senators said Shein’s assurances that it uses third-party audits to ensure its facilities do not use forced labour are false. The letter claimed “these types of audits are easily manipulated or falsified by state-sponsored pressure”. 

Instead, it suggests “it is appropriate to presuppose that any product made in Xinjiang is made with forced labour”. 

In February, senators questioned Shein over its links to Xinjiang after analysis found samples of Shein garments shipped to the US were made from cotton produced in the area, where widespread abuse of the Uyghur population has been recorded.

In December, a report alleged Shein's supplier factories were forcing garment makers to work 18-hour days, paying them as little as 3p per item, and permitting them just one day off a month. 

The US signed the Uyghur Forced Labour Prevention Act in December 2021, which made the import of goods manufactured wholly or in part in the Xinjiang region of China illegal.

Shein has been approached for comment. The frim is the world’s largest fashion retailer, with an estimated value of $64bn. 

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