Shein, the China-based firm, has submitted its Initial Public Offering (IPO) application in the United States amidst an ongoing investigation by the Select Committee on the Chinese Communist Party (CCP). This move comes as part of Shein's effort to become a publicly traded company.
"Shein’s public claims that they take 'visibility across our entire supply chain seriously' is not supported by the materials produced to the committee in its bipartisan investigation. We are continuing to carefully examine Shein’s regulatory and compliance programs, and I would encourage investors and banks underwriting this reported IPO to do the same.", said Mike Gallagher.
Shein has formally applied for an IPO in America, bringing an end to months of conjecture among legislators. The process of going public is standard for companies intending to transition into public ownership. It enables firms to offer their stock shares to regular investors. During its IPO, Shein will determine how many of these shares it wishes to make accessible for purchase. Investment banks are expected to recommend an initial price per share according to IG.
The CCP's Select Committee has been scrutinizing Shein due to allegations concerning forced labor practices. Known as a fast-fashion brand, Shein came under examination in May when Rep. Mike Gallagher (R-WI), Chairman of the CCP's Select Committee, and Raja Krishnamoorthi (D-IL), Ranking Member, raised issues about forced labor use and exploitation via the de minimis loophole. They voiced their concerns through outreach efforts towards Nike, Adidas, Shein, and Temu on these topics as indicated in a press statement.
On June 21st, 2022, US authorities passed the Uyghur Forced Labor Prevention Act (UFLPA). The law allows them power to forbid importation of goods tied with any form of forced labor from China. For some time now Human Rights Watch reports have implicated China in coercing individuals including Uyghurs into forced labor.
The Uyghur population, primarily Muslim and situated in the Xinjiang Uyghur Autonomous Region, has reportedly been subjected to forced labor, genocide, and other severe human rights violations by the CCP. Despite denials from the CCP, numerous countries such as the United States, the UK, Canada, and the Netherlands have accused it of broad-scale genocide according to BBC News.
In August, over a dozen US attorneys general wrote a letter addressed to Gary Gensler, Chair of the US Securities and Exchange Commission. They urged him to ensure that Shein adheres to American laws concerning forced labor before approving their IPO application. Earlier reports insinuated that some Shein products were made using cotton sourced from Xinjiang. Investigations found 2.1% of Shein's cotton came from banned regions. In response to these findings Shein alleges that they've stopped sourcing cotton from China altogether according to CNBC.
