A bipartisan group of US lawmakers are vociferously pursuing the SEC to force Chinese fast-fashion giant Shein, accused of forced labor, to disclose its supply chains. Other brands like Adidas, Nike, and the Chinese shopping app Temu are also under fire for allegedly manufacturing products using forced labor in China. Lawmakers want the SEC to crack down and perform a labor inquiry on Shein, ahead of a plausible Shein IPO in the US.
The lawmakers wrote letters to all the forced labor suspected-companies asking them to elaborate on how they were verifying the compliance of their supply chain with the ‘Uyghur Forced Labor Prevention Act.’
“We would like to offer an opportunity to Nike, Adidas, Temu, and Shein to respond to these serious accusations and provide information regarding their compliance with the US law.”
The letters to the brands came separately after another bipartisan group of lawmakers urged US regulators to condition the Chinese fast-fashion giant’s public offering by getting Shein’s attesting that it does not use forced Chinese labor.
China’s Shein Labor Inquiry: Shein Accused Of Forced Labor
Since Shein was founded in China in 2008, the company has been ratified as a ‘Chinese fast-fashion brand’ which relies heavily on TikTok and other social media influences as its advertising base to Gen Z. With its de facto holding company currently in Singapore, Shein has been lobbying to expand its distribution channels in the US market.
Shein’s forced labor suspicions are privy to allegedly falsifying reports of underpaid labor in its supplier factories and mistreating the marginalized group of Uyghurs.
China’s fashion industry giant Shein’s controversy is based on an alleged violation of the 2021 Uyghur Forced Labor Prevention Act. Some of the Chinese fast-fashion discount apparel company’s factories are suspected to be located in Xinjiang Uyghur Autonomous Region of China. Shein has refuted the claims.
“As a global company, Shein is committed to respecting human rights and adhering to local laws and regulations in each market we operate in. Shein has zero tolerance for forced labor.”
– A Shein spokesperson.
Several human rights groups believe that China’s Muslim-majority Uyghurs have been subjected to being banned from practicing their culture and mass incarceration in forced labor camps. China’s Beijing responded to the claims and declared that the ethnic minority of Uyghurs are not being repressed and that the security measures in Xinjiang’s region pertain to terrorism threats.
Shein’s Forced Labor Affects Workers’ Rights: Shein’s Congress Inquiry And SEC
The $64 billion company is gearing up to execute an upcoming IPO in 2023. The US lawmakers’ concerns are echoed by another independent coalition ‘Shut Down Shein’ which wrote to the SEC that the Chinese fast-fashion giant has been aggressively raising capital for the same plan. They also urged the SEC to deny IPO registration to Shein without evidence.
“We request you to set forth regulations and mandate Shein to certify via independent verification that it does not use Uyghur forced labor as a condition of being registered to issue securities in the United States.”
The Congress representations of 22 bipartisan lawmakers will be responded to directly by SEC’s Chair Gary Gensler. Under the 2021 Act, goods manufactured in the Uyghur area of China are not entitled to any means of entry into the US.
“Access to US Capital markets should not be given freely to corporations like Shein which threaten US national security with nefarious business practices. They are making Americans complicit in their violation of US Law.”
– Chapin Fay, Director of Shut Down Shein.
The US lawmakers also penned down to Gensler of SEC that Shein works with third parties to audit its facilities, which can easily be falsified and manipulated by state-sponsored pressure.
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