Chinese Fast-Fashion Giant Tied to Slave Labor
WASHINGTON — The Coalition for a Prosperous America (CPA) today released a statement calling on financial regulators in the United States and in London to prohibit Shein from moving forward with a large initial public offering (IPO). Shein is reportedly seeking a $90 billion valuation, underwritten by major investment banks including JPMorgan Chase and Goldman Sachs, but its ambitions are now facing growing bipartisan opposition in the U.S. Congress. As The Wall Street Journal recently reported, “Shein has shifted its main listing efforts to London” and an IPO filing “could come in the next few weeks” on the London Stock Exchange.
A recently released report by the Prague Security Studies Institute (PSSI), titled “Suppliers in Chains: SHEIN’s Troubling IPO,” finds that Shein has either concealed its practices or willfully misled consumers and lawmakers in the U.S. and the EU regarding its record on human rights, workers’ rights, environmental damage, consumer product toxicity levels, and customs regulations. It has been demonstrably and repeatedly linked to forced labor from the Xinjiang Province in China, faces a multitude of criminal allegations, and has demonstrated a repeated failure to protect workers and consumers. The New York Times reported that a CBC Marketplace investigation found elevated levels of lead in some Shein products, including a toddler’s jacket and tiny purse.
“Shein’s troubling record of misrepresentations, human rights abuses, and several other concerns should properly exclude the company from being listed on any U.S. exchanges. I would also caution the London Stock Exchange where it’s probably headed next, if the SEC shows some rare resolve.” — Roger Robinson, Jr., PSSI Co-Founder and former Chairman of the Congressional U.S.-China Economic and Security Review Commission.
In February, U.S. Senator Marco Rubio (R-FL) called on SEC Commissioner Gary Gensler to require enhanced disclosures from Shein as a condition of approving its IPO, and to block the IPO, if necessary, to protect U.S. investors. Rubio has also urged DHS Secretary Alejandro Mayorkas to investigate Shein and add the company to the Uyghur Forced Labor Prevention Act (UFLPA) Entity List if they are found to be in violation of current law.
Shein has also come under bipartisan scrutiny in Congress for exploiting the de minimis loophole, which allows the Chinese company to evade customs enforcement by U.S. Customs and Border Protection by claiming that nearly all their products are valued under $800 and can enter the United States uninspected and free from duties. As first reported by The New York Times, a bipartisan investigation into Shein by the House Select Committee on the Chinese Communist Party found serious forced labor concerns.
U.S. Representative Jennifer Wexton (D-VA) led a bipartisan group of two dozen U.S. lawmakers calling for the SEC to halt the Shein’s IPO until it verifies it does not use forced labor. Separately, 16 Republican attorneys general also asked the SEC to audit the company.
“Given Shein’s well-documented ties to slave labor, as well as its ongoing exploitation of the de minimis loophole, it’s overwhelmingly clear that Shein should not be allowed to move forward with an IPO in the U.S. or in London,” said Zach Mottl, Chairman of CPA. “Chinese companies continue to exploit our laws and the international system, while abusing our capital markets and defrauding investors. It is past time to ban the CCP from being able to access our capital markets to fund their malign activities.”
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