In a letter dispatched to the Securities and Exchange Commission (SEC) last week, Republican attorneys general from 16 U.S. states to scrutinize and issue a warning on the supply chain of fast-fashion giant Shein for potential use of forced labor.
This call echoes a similar plea made in May by two dozen U.S. representatives, urging the SEC to delay Shein’s potential initial public offering until conclusive evidence of non-use of forced labor is provided.
Arianna McLymore for Reuters reports,
Shein declined to comment on its IPO plans.
Reuters reported in July that Shein was working with at least three investment banks on a potential U.S. initial public offering and had been in talks with the New York Stock Exchange and Nasdaq, citing people familiar with the matter.
Shein has been able to rapidly expand in the U.S. despite concerns over its labor practices and sustainability. To speed deliveries and meet rising U.S. demand, Shein in 2022 opened a warehouse in Indiana. It expanded by 302,000 square feet or 20% this month to nearly 1.8 million square feet, according to a source familiar with the matter.
Shein has no credible answers
Shein has responded, as always, with their canned statement: “We have zero tolerance for forced labor, and no contract manufacturers in the Xinjiang region. We will continue to engage with U.S. federal and state officials to answer their questions.”
The attorneys general, however, are not satisfied.
Calling on the SEC to exercise vigilance, the notes that Shein “refuses to engage with U.S. government officials and is instead touting a purported self-financed and managed certification process that it claims demonstrates compliance with U.S. law. Such self-certification is insufficient.”
Shein’s expansion despite forced labor allegations
Coincidentally, the letter was issued on the very day Shein announced its acquisition of a financial stake in the parent company of Forever 21. This move raised eyebrows as Shein hinted at potentially making its clothing available at Forever 21 outlets situated in malls across the United States.
Shein operates in over 150 countries and though the company has shifted its headquarters to Singapore, the majority of its products are manufactured in China. The company’s rapid expansion in the U.S., despite questions about its labor practices and sustainability, has been notable. Shein expanded its Indiana-based warehouse by 302,000 square feet, or 20%, this month to meet the growing U.S. demand for its products. Indiana’s attorney general has not signed the SEC letter.
Whitewashing can’t save Shein
Numerous reports have linked fast fashion giant Shein to unethical business practices including worker exploitation, copyright infringement and environmental harm. Laboratory tests ordered by Bloomberg found that some of Shein’s cotton was sourced from the Uyghur Region.
But all Shein can do is stonewall and whitewash.
“…even SHEIN’s press tours with a carefully curated group of influencers meant to highlight how SHEIN claims it has brought its supply chain aboveboard, resulted in significant backlash and highlighted significant reasons for concern. Feeling the pressure of this widespread scrutiny, SHEIN has turned to Washington lobbyists to whitewash its image.”
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