US states ask regulator SEC to verify if S’pore-based Shein complies with forced labour rules

NEW YORK - Republican attorneys-general from 16 US states have asked the Securities and Exchange Commission (SEC) to audit the supply chain of China-founded fast-fashion retailer Shein for the use of forced labour ahead of its potential initial public offering (IPO).

Amid rising friction between Washington and Beijing, the letter sent to the SEC last week added to pressure on Shein as China hawks in Congress target Chinese firms that do not align with US foreign policy goals.

Shein, which sells US$7 (S$9.50) dresses and US$5 home goods in more than 150 countries, has moved its headquarters to Singapore but manufactures most of its products in China.

The letter urged the SEC to ensure that Shein and other foreign companies listed on US exchanges verify through independent audits that they comply with US laws prohibiting imports made with any forced labour.

Shein has said it does not plan to list in 2023 and has zero tolerance for forced labour. It was not immediately available to comment on the letter or its IPO plans.

Reuters reported in July that Shein was working with at least three investment banks on a potential IPO in the United States and had been in talks with the New York Stock Exchange and Nasdaq, citing people familiar with the matter.

Shein has been able to rapidly expand in the US despite concerns over its labour practices and sustainability. To speed up deliveries and meet rising US demand, it opened a warehouse in Indiana in 2022. It expanded by 302,000 sq ft, or 20 per cent, in August to nearly 1.8 million sq ft, said a source familiar with the matter.

Indiana state attorney-general Todd Rokita, a Republican, did not sign the letter.

In May, two dozen US representatives sent a similar letter to the SEC asking for it to halt a potential Shein IPO until the company confirmed that it does not use forced labour. REUTERS