A bipartisan group of two dozen U.S. representatives was calling for the Securities and Exchange Commission to halt the initial public offering of Chinese-founded fast-fashion giant Shein until it verifies it does not use forced labor, according to a letter seen by Reuters.
The U.S. lawmakers want the SEC to mandate Shein to independently audit and verify "that the company does not use Uyghur forced labor as a condition of being registered to issue securities in the United States," the letter said.
Sources have said Shein is eyeing an IPO in the U.S. this year.
The rapid growth of the cheap fashion firm is attracting political scrutiny in several countries where leaders say the retailer is threatening homegrown businesses.
A 2022 Bloomberg report found that its garments contained cotton linked to China's Xinjiang region. Rights groups and governments have accused China of forced labor and internment of Uyghurs, a mainly Muslim ethnic minority, in Xinjiang. Beijing denies any rights abuses.
The key to Shein's success, according to some politicians and analysts, is a little-known trade exemption known as the de minimis rule. They say the exception allows websites selling cheap Chinese goods to evade millions of dollars in taxes and fees, as well as regulations banning forced labor in the consumer product supply chain.
The push was led by Democratic Representative Jennifer Wexton and Republican John Rose, and includes a signature from Democrat Earl Blumenauer, who previously introduced legislation in 2022 that would have effectively ended de minimis treatment for imports from China and other non-market economies.
"We strongly believe that the ability to issue and trade securities on our domestic exchanges is a privilege, and that foreign companies wishing to do so must uphold a demonstrated commitment to human rights across the globe," the letter said.
A spokesperson for Shein said the company has "zero tolerance" for forced labor and that suppliers are required to adhere to "a strict code of conduct that is aligned to the International Labour Organization’s core conventions."
"As a global company, SHEIN takes visibility across our entire supply chain seriously. We are committed to respecting human rights and adhering to local laws and regulations in each market we operate in," the spokesperson said.
Now headquartered in Singapore, China-founded Shein continues to source many of its clothes from China. The company was set to raise $2 billion in funding in March and is planning to IPO in the second half of this year.
