The fast-fashion giant Shein is under increasing pressure as it prepares for a highly anticipated stock market listing in London, with concerns mounting over its supply chain practices.
A former minister, Liam Byrne, urged the UK government to examine the company’s links to alleged forced labor, particularly in the Xinjiang region of China, where the Chinese government has detained around one million Uyghur Muslims and allegedly subjected many to forced labor.
Byrne, a Labour MP and head of the UK parliament’s business and trade committee called for new legislation to tackle potential human rights violations in supply chains, citing Shein’s rapid global rise as a major reason for concern.
The China-founded retailer, which has gained popularity for its ultra-low prices and fast turnaround on the latest fashion trends, has been accused of relying on suppliers with questionable labor practices.
The company is preparing for a listing on the London Stock Exchange, with a valuation reportedly set at £50 billion. Originally, Shein had planned to go public in New York, but fierce opposition from US politicians led to the change in venue.
Calls For Tougher Supply Chain Regulations
Byrne suggested the UK follow in the footsteps of the US, which passed the Uyghur Forced Labor Prevention Act in 2021. The act prohibits the use of cotton from Xinjiang, a region known for its production of textiles, in response to allegations of forced labor. Byrne emphasized the importance of introducing similar laws in the UK to ensure that Shein, and other companies, meet the highest standards in protecting human rights.
“My view is that we don’t have a Uyghur Forced Labor Prevention Act in Britain and therefore it’s incumbent on ministers to satisfy themselves that Shein passes the highest standards on forced labor protections. That is something a Labour government might want to address.”
Liam Byrne
In response to these allegations, Shein has maintained its position that it operates with a “zero-tolerance policy” on forced labor. A company spokesperson emphasized that Shein is committed to human rights, stating, “Visibility across our entire supply chain is of the highest importance to us, and we are wholly committed to respecting human rights.”
The company added that it requires contract manufacturers to source materials only from approved regions and conducts independent verification of its supply chain.
Shein has partnered with Oritain, a company specializing in supply chain transparency, to trace the origin of its cotton. However, in November last year, Oritain revealed that 1.7% of Shein’s cotton supply tested positive for cotton from unapproved regions, raising concerns about the company’s ability to fully control its supply chain.
Shein’s rapid growth and success have also put a spotlight on its operational practices. In August, the company admitted to discovering two cases of child labor and wage violations within its supply chain.
This revelation came just months after the New York Stock Exchange raised concerns about the company’s due diligence, contributing to its decision to list in London instead of New York.
Human Rights Concerns Over London Listing
Human rights activists are urging UK regulators to block Shein’s listing on the London Stock Exchange, citing the alleged forced labor practices. Campaigners argue that without more transparency and stricter legislation, Shein’s expansion into the UK market could come at the expense of ethical labor standards.
In addition to these domestic pressures, Shein and other Chinese retailers such as Temu and AliExpress could face new EU customs duties on small packages. Currently, Chinese retailers benefit from a loophole that exempts orders under €150 (£126) from such duties. However, the new rules may impose further financial burdens on these direct-to-consumer retailers.
As such, whether the company can prove its commitment to ethical supply chain practices will likely play a pivotal role in its future expansion, particularly as it eyes a significant stock market debut in London.
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