Shein targeted by lawmakers over alleged forced labor

WASHINGTON — Lawmakers from both parties are urging the nation’s top market regulator to require Chinese fast-fashion giant Xin to disclose potential forced labor practices ahead of the company’s possible initial public offering in the United States.

The fast fashion company has come under fire over accusations of mistreatment of the Uyghurs, a marginalized group in China, and for allegedly falsifying reports of forced or paid labor at the factories of its suppliers, some of which are located in China’s Xinjiang Uyghur Autonomous Region. .

Alleged practices violate 2021 The Uyghur Forced Labor Prohibition ActReps. Jennifer Wexton, D-Virginia, and John Rose, R-Tennessee, wrote in a letter Monday to Securities and Exchange Commission Chairman Gary Gensler.

A spokesperson for Shein told CNBC, “As a global company, Shein takes visibility across our entire supply chain very seriously. We are committed to respecting human rights and adhering to local laws and regulations in every market in which we operate.” “Our suppliers must adhere to a strict code of conduct in line with the core conventions of the International Labor Organization. We have zero tolerance for forced labour.”

The Securities and Exchange Commission did not immediately respond to a request for comment.

Representatives are leading a bipartisan group, including 22 other lawmakers, in calling on the Securities and Exchange Commission to require Shein to independently verify that it does not use forced labor before it is allowed to issue securities in the United States. year.

“While Shein claims its products do not use forced Uyghur labor and works with third parties to audit its facilities, experts easily confront these types of audits being manipulated or falsified through state-sponsored pressure,” the lawmakers wrote to Gensler. Other experts argue that it is appropriate to presume that any product made in Xinjiang is made of forced labor.

Goods manufactured in that region of China are not eligible to enter the United States under the 2021 law.

Lawmakers also asked Gensler to notify national securities exchanges registered under Section 6 of the Securities Act of the requirement. Section 6 Outline the application process To register as a national stock exchange.

Shein’s business model relies heavily on advertising to Gen Z buyers on mobile apps, such as TikTok, and through social media influencers.

The company, whose de facto holding company is based in Singapore, has hired its first federal lobbyists in 2022 with the aim of expanding its distribution into the US market, According to Politico.

The lawmakers’ message reflects the concerns of outside groups. Independent Coalition Shut Down Shein also has it Called on the SEC To refuse to register Shein’s IPO unless you provide evidence of compliance with the Uyghur Forced Labor Prohibition Law.

“Access to U.S. capital markets is a privilege, not a right, and should not be freely granted to companies that threaten U.S. national security with nefarious business practices, and that make Americans complicit in their violation of U.S. law,” Chapin Fey, executive director of Shut Down SHEIN, writes.

– CNBC’s Gabrielle Vonrouge contributed to this article.