Dive Brief:
- Shein has denied the rumor that it filed to become publicly traded on the New York Stock Exchange, according to a company statement sent to sister publication Fashion Dive.
- Reuters reported Thursday that the company quietly submitted its registration with the U.S. Securities and Exchange Commission and that Shein’s debut on the stock exchange could come before the end of 2023. The report cites anonymous sources familiar with the matter.
- In May, a bipartisan group of lawmakers asked the SEC to halt a potential Shein IPO until the company confirmed it did not use forced labor in the manufacturing of its garments.
Dive Insight:
Reuters first reported that the fast-fashion company was eyeing a $2 billion funding raise along with the IPO in March. Shein reportedly raised this $2 billion in May, but a report from the Wall Street Journal found that its valuation had dropped to $66 billion, compared with $100 billion the year prior.
In the letter asking the SEC to halt the IPO, lawmakers stated that there are “credible allegations of the company’s use of underpaid and forced labor” in the Xinjiang province, an area where China has been accused of detaining more than 1 million Uyghur people.
Shein, which was founded in China, is now based in Singapore. The company has repeatedly denied using forced labor in its supply chain.
A spokesperson for the SEC didn’t respond to Fashion Dive’s request for comment ahead of press time. The Shein spokesperson didn’t comment beyond the denial of the rumor.
Beyond the request to halt the potential IPO, Shein was found to avoid certain tariffs on its imports to the U.S. because of its low-priced products, according to a report from a U.S. House Select Committee earlier this month.
Shein and Temu avoid customs scrutiny on their shipments to the U.S. because of the de minimis provision of the Tariff Act of 1930, which mostly exempts packages worth less than $800 from being reviewed. Shein and Temu benefit from this provision because their average products sell for just $11 and are shipped individually, directly to consumers.
That group of lawmakers, the U.S. House Select Committee on Strategic Competition between the United States and the Chinese Communist Party, is conducting an ongoing investigation into the labor practices of Shein, Temu, Nike and Adidas and asking the companies to detail their compliance with the Uyghur Forced Labor Prevention Act, a 2021 law banning products from the Xinjiang region.
