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Bipartisan Lawmakers Ask SEC to Crack Down on SHEIN’s Alleged Forced Labor Use

Screenshot of SHEIN’s homepage taken on May 2, 2023.

With the online fast fashion retailer reportedly aiming to go public, lawmakers want the Securities and Exchange Commission (SEC) to make SHEIN prove it doesn’t use forced labor.

Two dozen Members of Congress wrote to the SEC on Monday to ask the agency to mandate that online retailer SHEIN “certify via independent verification” that it does not use forced labor as a condition for its potential Initial Public Offering (IPO).

We’ve covered SHEIN at length on the blog; here’s a primer on the company’s litany of bad practices, and check out my podcast interview with Ayesha Barenblat of Remake that goes into more depth. One of the biggest concerns about SHEIN is that its products are made using Uyghur forced labor. And because SHEIN ships its items directly to consumers, the company is avoiding U.S. Customs and Border Protection enforcement of the Uyghur Forced Labor Prevention Act, which bans all imports from China’s Xinjiang region unless importers can definitively prove their goods aren’t made with forced labor.

Now the bipartisan group of lawmakers want the SEC to finally force SHEIN to prove its ultra cheap clothing isn’t tied to forced labor, writing to SEC Chair Gary Gensler:

“SHEIN has come under heavy criticism for utilizing underpaid labor in its supplier factories and violating human rights. A Bloomberg analysis has found scientific evidence that cotton from the Xinjiang Uyghur Autonomous Region (XUAR) was present in clothing sold by SHEIN in 2022. While SHEIN claims its products do not utilize Uyghur forced labor and it works with third parties to audit its facilities, experts counter these types of audits are easily manipulated or falsified by state-sponsored pressure. Other experts argue that it is appropriate to presuppose that any product made in the XUAR is made with forced labor.” 

With SHEIN now said to be looking to go public by the end of this year, the lawmakers want the SEC to “set forth regulations and mandate SHEIN to certify via independent verification that the company does not use Uyghur forced labor as a condition of being registered to issue securities in the United States.” 

The lawmakers aren’t the only ones sounding the alarm about SHEIN. A new coalition called Shut Down Shein is making a whole lot of noise in Washington, meeting with lawmakers and taking out advertisements criticizing the company. It’s unclear who exactly is a part of the coalition, but Washington lobbying firm Actum is running it, and managing director Chapin Fay told Semafor that members include a number of American brands and human rights groups.

“The goal is to bring Shein ‘out of the darkness’ and potentially force the company’s reclusive CEO, Chris Xu, to testify before Congress,” Semafor reported.

Indeed, SHEIN managed to take over the fast fashion market without the flashy advertising budget used by many brands. Instead, it grow in popularity via another popular-yet-controversial Chinese app — TikTok — and now dominates the space. Washington has been slow to respond to the company’s quick rise and bad behavior, and SHEIN and other Chinese companies like Temu are “outmaneuvering regulators,” according to a recent report from the U.S.-China Economic and Security Review Commission.

For what it is worth, a SHEIN spokesperson told the Associated Press that the company has “zero tolerance for forced labor.” It’s also clearly trying to change the narrative — The New York Times ran this puff piece on the company’s strategy on Tuesday!

There’s no doubt SHEIN is popular, but that doesn’t mean we should sit idle and let the company get away with human rights violations and other bad practices. As we’ve argued before, there’s a lot more that Washington can (and should!) be doing.

That includes addressing SHEIN’s exploitation of the de minimis rule, which allows imports to enter the country duty-free if they are valued under $800. Because SHEIN sends its products via a direct-to-consumer model, that has meant it has avoided paying tariffs, despite the fact it is sending huge amounts of clothing to the United States every year. And as noted above, the direct-to-consumer model also has allowed it to dodge enforcement of the Uyghur Forced Labor Prevention Act.

Which is why the lawmakers’ request to require SHEIN to certify via independent verification that it doesn’t use forced labor in order to be considered for an IPO seems reasonable. As the Members of Congress note, “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.”

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