"Shein Needs To Stop Outsourcing Responsibility For Its Apparel Juggernaut", 4 June 2024

Shein, the largest and fastest-growing apparel company in the world, is getting ready to go public. It is reportedly about to file a prospectus with Britain's Financial Conduct Authority for approval to launch a public offering of shares valued in total at about $63 billion on the London Stock Exchange.

Last November, the company first sought to go public in the US creating the expectation that it would launch one of the largest initial public offerings in history. When Shein filed with the U.S. Securities and Exchange Commission (SEC) it did so confidentially, a common practice to avoid disclosure of sensitive data. But in an unusual move, the SEC told Shein that its application would not be accepted unless it was made in a public filing.

Shein has yet to make its SEC application public, undoubtedly weary of the increased scrutiny this would generate from the U.S. Congress, news media and the consuming public, especially relating to the company’s reported sourcing of cotton from Xinjiang, China.

Now it appears that the company is moving its IPO ambitions to the U.K., hoping to avoid the push-back it has received in the U.S. As the company pursues its British option, it remains to be seen whether U.K. regulators will raise concerns about Shein’s labor and product safety practices.

Shein creates incentives for its suppliers to pay their factory workers poorly and often subject them to substandard and unsafe working conditions.

An investigation from the Swiss-based group Public Eye found that workers at Shein factories in China often were working 75 hours a week. Other reports describe unsafe working conditions including the absence of safety protocols such as emergency exits. Many employees in these factories work without contracts or minimum wage requirements. While Shein has denied most claims of poor working conditions, in 2022 it did acknowledge excessive hours at two factories and pledged $15 million to improve factory conditions.

Shein also has come under fire for poor product safety, which endangers both its workers and consumers. A Canadian investigation found that 20% of Shein clothes that were tested had toxic chemicals in their products. A report from Greenpeace Germany found very high levels of Phthalates in shoes and formaldehyde in baby girl’s dresses.

Shein rejects most of these charges and asserts the company’s commitment to “operating responsibly across every area of our business and hold ourselves to leading international standards. The trust of our customers and partners is paramount to what we do, so we implement leading industry practices and policies designed to protect those we work with.”