A group of bipartisan lawmakers sent a letter to the United States Securities and Exchange Commission (SEC), asking the agency to look into the business practices of Chinese fast fashion retailer Shein to confirm the organization does not use forced labor from China’s Muslim Uyghur population before the business launches its reported initial public offering (IPO).
According to the Associated Press, the letter, which was sent to SEC chair Gary Gensler, cited a Bloomberg report from November 2022 claiming some Shein garments shipped to the United States were made from cotton in China’s Xinjiang region. Lawmakers asked the SEC to certify that the company does not use Uyghur forced labor, through an “independent verification” process.
“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.
In a statement, Shein spokesperson Peter Pernot-Day said the company believes in providing visibility across its entire supply chain. “We are committed to respecting human rights and adhering to local laws and regulations in each market we operate in,” Pernot-Day said. “Our suppliers must adhere to a strict code of conduct that is aligned to the International Labour Organization’s core conventions. We have zero tolerance for forced labor.”
Read more: Fast-Fashion Giant Shein Faces Probe Over Tariff-Avoiding Practices
Though Shein hasn’t said it will be going public this year, some notable news outlets have reported the company is raising money in anticipation of a U.S. listing during the second half of 2023.
If the SEC does conduct an investigation into Shein, it will be the second time in 2023 that officials have looked into the organization's business practices. In March 2023, regulators in South Africa launched an investigation into the business to determine if Shein’s import practices had given the company an unfair competitive advantage. South African groups claimed Shein deliberately sent its goods in small packages of lesser value to reduce import duties, as if it were a small business.
The Wall Street Journal reported that the issues raised in South Africa resembled complaints from the U.S. that Shein and other Chinese retailers are using an exception in U.S. customs law to import goods without paying tariffs. The law, known as the de minimis rule, allows American tourists to bring back souvenirs from overseas duty-free and is now being used by businesses to avoid paying billions of dollars in tariffs.
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