SHEIN Under Congressional Spotlight for IPO Plans

Fast-fashion brand SHEIN’s confidential filing to go public has drawn the attention of lawmakers. Republican Congressman Blaine Luetkemeyer has suggested drafting legislation to prevent SHEIN from trading if the U.S. Securities and Exchange Commission (SEC) doesn’t deny its application due to allegations of forced labor and exploitation of U.S. trade laws.

Luetkemeyer argues that if the SEC approves SHEIN’s public listing, Congress could use various countermeasures. These might include laws blocking SHEIN’s trading on U.S. soil or even restricting its shipments into the country.

“Urge the SEC to apply maximum scrutiny to SHEIN’s business and management before letting it anywhere near our capital markets. Accessing U.S. markets and capital is a privilege and we rely on the SEC to root out undeserving companies. I sincerely hope the officials at the commission will review SHEIN to ensure American capital does not fund crimes against humanity.”

Rep. Blaine Luetkemeyer, R-Mo., via CNBC

Part of the newly formed GOP-led House Select Committee on the Chinese Communist Party, Luetkemeyer is at the forefront of an investigation into SHEIN’s practices. The committee is examining allegations of forced labor and misuse of the de minimis rule, which allows goods valued under $800 to avoid stringent customs checks.

Despite the backlash, SHEIN, valued at $66 billion, is poised to go public next year. In response to these allegations, a SHEIN spokesperson emphasized the company’s zero-tolerance stance on forced labor and its commitment to respecting human rights. They specified that the company requires contract manufacturers to source cotton only from approved regions, yet acknowledged a small percentage of their cotton materials have been traced back to banned regions known for forced labor. When this does occur, the spokesperson said, “We take immediate action such as suspending production, halting shipments to the United States and removing U.S. product listings.”

While the U.S. has prohibited the import of cotton and other products originating from Xinjiang, China, since 2021 due to evidence of human rights violations, other nations have yet to adopt similar regulations.