China: Forced labour links under renewed scrutiny as Shein plans to go public in US
"Shein’s IPO Plan to Fuel Scrutiny Over Cotton, China Roots", Nov 29 2023
The Singapore-headquartered company filed confidentially for a listing in New York .... Bloomberg News reported that it could seek a valuation of as much as $90 billion in a first-time share sale ...
To achieve that milestone, Shein will have to do a historic job of persuading sceptical investors, politicians and regulators that the controversies surrounding it aren’t an obstacle to its growth.
The company faces issues including allegations that its products contain cotton from a Chinese region accused of making the material with forced labour, regulatory concern about Chinese firms listing in the US and a bruising legal battle with rival PDD Holdings Inc.’s Temu. Investors will likely have questions about how much of management’s time will be taken up with challenges that aren’t directly related to maintaining the app’s dominance, built on selling clothes for as little as $2.
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Representative Jennifer Wexton, a Democrat from Virginia and one of the most Shein’s most vocal critics, issued a statement Tuesday urging greater scrutiny of Shein’s supply chain ahead of a listing.
“If the fast-fashion giant Shein wants to go public in the US, they should have to prove to American consumers that their products are not sourced from forced labour,” Wexton said in the statement.
.... a Bloomberg investigation last year found scientific evidence that cotton produced in the region, alleged to be made using forced labour, was present in clothing sold by Shein.
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Shein has a zero-tolerance policy for forced labor and requires its contract manufacturers to only source cotton from approved regions, according to a statement from a company spokesperson responding to Wexton. Only 2.1 percent of Shein’s cotton tested positive for unapproved cotton, the statement showed. The company declined to comment earlier on the confidential filing.
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There have been few Chinese IPOs in the US since a sweeping crackdown on overseas listings that wiped out an estimated $1 trillion of market value. Part of Shein’s long-running campaign to prepare for a US first-time share sale is to position itself as a global company, even though it traces its roots to China.
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