Sen. Marco Rubio (R-Fla.) is urging the UK Chancellor to fully investigate Chinese fast-fashion company Shein before allowing it to be listed on the London Stock Exchange.
In a
letter dated June 10 to the UK Chancellor of the Exchequer Jeremy Hunt, Mr. Rubio informed him of Shein’s “unethical” business practices, including “alleged exploitation of forced labor and trade loopholes.” The senator urged Mr. Hunt to take action to address the matter.
“Slave labor, sweatshops, and trade tricks are the dirty secrets behind Shein’s success,” Mr. Rubio wrote. “I trust you will treat these allegations against Shein with the utmost seriousness, investigate them fully, and take appropriate action to protect investors.”
Shein seeks to list on the London Stock Exchange with an initial public offering (IPO)
valued at around $66 billion,
according to investment research firm Morningstar. The move comes after the company faced obstacles in its attempts to list in New York due to scrutiny from U.S. lawmakers.
Shein is a fast-fashion online retailer that directly ships products to customers at significantly low prices. It relies on thousands of suppliers in the textile hub of China’s Guangdong Province.
In February, Mr. Rubio
called on the chairman of the Securities and Exchange Commission (SEC) to mandate that Shein provides comprehensive disclosures about the nature of its business operation and “the risks of doing business” in China. If Shein fails to comply, the senator recommended that the SEC block the company’s public listing in New York to protect U.S. investors.
Tariff Loopholes
Lawmakers pointed out that Shein exploits a trade loophole called the “de minimis.” This U.S. trade exemption permits online retailers to ship small packages valued at $800 or less directly to customers without paying tariffs. This loophole enables Shein to sell inexpensive Chinese products to avoid millions of dollars in taxes and fees, as well as regulations banning forced labor in the consumer product supply chain.
A
report from the U.S.-China Economic and Security Review Commission last year raised concerns about Shein’s business practices, including forced labor, intellectual property rights violations, and exploitation of trade loopholes.
According to an
investigative report in June 2023 from the House Select Committee on the Chinese Communist Party, “Chinese companies rely on the de minimis provision to avoid bearing responsibility for compliance with the UFLPA and other prohibitions on forced labor while relying on tens of thousands of Chinese suppliers to ship goods direct to U.S. consumers.”
The committee said Shein and another Chinese fast fashion retailer, Temu, likely represented over 30 percent of all de minimis shipments to the United States in 2022. The investigation also found that nearly half of all shipments to the United States under the de minimis provision likely originated from China.
The United States imports nearly 1 billion de minimis shipments annually, according to a 2022
report from the U.S. Customs and Border Protection.
Shein also benefits from European Union tariff rules that allow customers to order parcels worth less than 150 euros (about $170) from overseas online retailers without paying import tax.
“The United States and the United Kingdom have many honest businesses that employ workers, import clothing from reputable manufacturers, and pay taxes accordingly. Shein’s dishonest business threatens honest businesses everywhere,” Mr. Rubio wrote in his letter to Mr. Hunt.
A UK politician shared the same concerns as Mr. Rubio regarding Shein’s IPO. Lord David Alton of Liverpool
told The Epoch Times in a May 29 email that he has “extensive” concerns regarding Shein’s efforts to launch its IPO in London, citing the company’s alleged forced labor and tariff loophole exploitations.
Lord Alton also said that allowing Shein to list on the London Stock Exchange would be “an endorsement of a morally questionable business model built off of the back of slave labor, data harvesting, and serving as a shop window for the Chinese Communist Party.”
Like other Chinese companies, Shein is required to collaborate closely with Beijing in matters of data and intelligence collection under the Chinese regime’s Data Security Law and National Intelligence Law.
Forced Labor Allegations
In 2021, the United States banned cotton importation from Xinjiang due to “horrific abuses” against the Uyghurs and other ethnic minorities in the region. The ban applied to all products manufactured in Xinjiang since June 2022 under the Uyghur Forced Labor Prevention Act (UFLPA).Congress enacted the UFLPA in 2021 in response to mass forced labor in Xinjiang. This law ensures that goods made with forced labor in the region are restricted from entry into the United States. This law presumes that the importation of any goods manufactured in Xinjiang violates section 304 of the Tariff Act of 1930, which prohibits the importation of products made with forced labor.
Shein told The Epoch Times that it “has a zero-tolerance policy for forced labor. We require our contract manufacturers to only source cotton from approved regions. We take visibility across our entire supply chain seriously, and we are committed to respecting human rights.”
The Chinese communist regime has established a vast network of mass internment camps, where at least 1 million Uyghurs are unlawfully detained, according to rights groups.
Washington has
accused Beijing of ongoing
genocide and crimes against humanity that target Uyghurs and other ethnic and religious minority groups in Xinjiang. The regime denies the allegations.
Mary Man contributed to this report.
