You may have seen those annoying Youtbe ads for SHEIN, a Chinese fashion retailer. At the end of November, the company filed for a US Initial Public Offering (IPO), which means it wants to be on our stock market. Senator Rick Scott (R-FL) expressed concerns over the development in a recent letter to NASDAQ and the New York Stock Exchange, telling them to ensure SHEIN will behave transparently over its potential use of forced labor and its conduct.
The concern over forced labor comes from the fact that 90% of China's cotton production is based in Xinjiang, using Uyghur forced labor. SHEIN stands credibly accused of using this cotton in its products, a story Bloomberg has covered since 2022.
More suspiciously, SHEIN products bought in the US are shipped directly from China, and most are under the $800 de minimis threshold, meaning they do not have to pay import duty. The problem with this, Sen. Scott wrote, is this means they are less subject to scrutiny and can dodge the Uyghur Forced Labor Prevention Act more easily.
As a result, Sen. Scott put forth multiple questions for the NYE and NASDAQ to answer about SHEIN, such as ensuring they are not using forced labor, beheld to the Chinese Communist Party (CCP), or will comply with auditing and investing standards.
"These questions must be answered before moving forward with any listing on American financial exchanges," said Scott, adding, "Americans have already lost tens of billions of dollars on failed Chinese company IPOs in recent years, including Didi Global and Luckin Coffee. These frauds allow Communist China and their non-market economy to distort our free and open market, rob U.S. citizens of their savings, and give companies the benefits of access to U.S. markets without the responsibility of following the same laws as their competitors. It is in your interest to prevent this from occurring once again."
Scott first called out SHEIN's attempted entry into the US stock market in late November, saying, "Allowing continued IPOs for companies operating at the will of the CCP only hurts the integrity of our free & open system & our capital markets."
