"WRC accuses Shein over garment factory closure", 8 November 2024

Worker rights campaigners have criticised...Shein for failing to protect workers at a former garment factory in Guatemala which supplied a brand it part owns.

The US-based Worker Rights Consortium (WRC) says the Industrial Hana factory closed down in October 2023 without paying its 250 employees $1.5 million in unpaid severance and other benefits owed to them under Guatemalan law.

A WRC investigation found that, in the months leading up to the factory’s closure, the bulk of Industrial Hana's production was for Lucky Brand, Puma and American Eagle Outfitters (AEO).

It approached all three and says that Puma and AEO, despite claiming the orders had been subcontracted to the factory without their knowledge, both agreed to contribute $500,000. Puma persuaded its official supplier to foot the bill.

However, Lucky Brand, which is owned by the SPARC Group which in turn is 33% owned by Shein, had so far failed to contribute...

"The WRC continues to call on Lucky Brand, the third major brand whose products were produced at Industrial Hana during the months leading up to the factory closure, to join AEO and Puma in correcting the wage theft from workers.

"All of the workers interviewed by the WRC reported that their financial situations are dire, and the continuing nonpayment of severance is having devastating consequences for them and their children."

A Puma spokesperson commented: "As a responsible business partner for our suppliers, we recognise that our business practices, and our trading terms and conditions can have a significant impact on the organisation at our suppliers’ factories.

"Industrial Hana was not listed in our records and was not authorised to handle any PUMA products. The factory was sub-contracted without our knowledge.

"We still agreed to facilitate the prompt severance payment of $500,000 to the workers. As unauthorised subcontracting is forbidden in PUMA’s supplier handbooks, we entered into a dialogue to ensure the supplier which was responsible for placing the orders with Industrial Hana without authorisation, would provide the required funds."

Ecotextile News has also approached Shein and AEO for comment.