December 5, 2023

Two people hold two Shein bags after entering SHEIN’s first physical store in Madrid, Spain, on June 2, 2022.

Cesar de Luca | European Press | Getty Images

WASHINGTON — Lawmakers from both parties are urging the top U.S. market watchdog to require Chinese fast-fashion giant Shein to disclose potential forced labor practices ahead of the company’s possible U.S. initial public offering.

The fast-fashion company has come under fire over allegations of mistreatment of China’s marginalized Uyghurs, as well as for allegedly falsifying reports of forced or underpaid labor at its suppliers’ factories, some of which are located in China’s Xinjiang Uighur Autonomous Region.

The alleged practice breached the 2021 Uyghur Forced Labor Prevention ActReps. Jennifer Wexton, D-Va., and John Rose, R-Tenn., written in a letter SEC Chairman Gary Gensler on Monday.

“As a global company, Shein takes visibility across our supply chain seriously. We are committed to respecting human rights and complying with local laws and regulations in every market in which we operate,” a Shein spokesperson told CNBC. “Our suppliers are required to adhere to a strict code of conduct in line with the core conventions of the International Labor Organization. We have zero tolerance for forced labour.”

The SEC did not immediately respond to a request for comment.

The representatives are leading a bipartisan group that includes 22 other lawmakers to ask the SEC to require Shein to independently verify that it is not using forced labor before it is allowed to issue securities in the U.S. A potential IPO later this year prepares for the year.

“While Shein claims its products do not use Uyghur forced labor and works with third parties to audit its facilities, experts counter that these types of audits are easily manipulated or faked by state-backed pressure,” the lawmakers wrote to Gensler . “Other experts believe it is appropriate to assume that any product produced in Xinjiang is produced with forced labor.”

Under the 2021 Act, goods manufactured in that part of China are not entitled to enter the United States.

The lawmakers also required Gensler to notify national securities exchanges registered under Section 6 of the Securities Exchange Act of the requirement.Section 6 Outline the application process Registered as a national stock exchange.

Shein’s business model relies heavily on advertising to Gen Z buyers through mobile apps like TikTok and social media influencers.

The company’s de facto holding company is based in Singapore and has hired its first batch of federal lobbyists in 2022 with the goal of expanding its distribution to the U.S. market, According to Politico.

The lawmakers’ letter echoed concerns from outside groups.Independent League Shut Down Shein also Appeal to the SEC Deny Shein’s IPO registration unless it provides evidence of compliance with the Uyghur Forced Labor Prevention Act.

“Access to U.S. capital markets is a privilege, not a right, that should not be freely granted to companies that threaten U.S. national security with nefarious business practices and make Americans complicit in violating U.S. laws,” said Chapin Fay, executive officer at Shut The head of Down SHEIN wrote.

– CNBC’s Gabrielle Fonrouge contributed to this article.

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