A British human rights group has launched a legal campaign to prevent the online fashion giant Shein from achieving a spectacular listing on the London Stock Exchange.
Stop Uyghur Genocide, which accuses the Chinese fashion group of using Uyghurs as forced laborers in their cotton supply chain in the northwestern Chinese region of Xinjiang, urged the Financial Conduct Authority (FCA) this week to reject Shein's application. The group is challenging the potential listing on legal grounds.
Any attempt by Shein to be listed on the [London Stock Exchange] should be rejected," said a statement from the British law firm Leigh Day, which represents Stop Uyghur Genocide. The statement added that the FCA has a "statutory duty to integrity and to protect its investors.
Leigh Day did not present specific evidence for the claim that forced labor is used in Shein's supply chain.
A letter sent by Leigh Day to the FCA, which has been seen by the Financial Times, argues that approving the listing would be in conflict with the United Kingdom's obligations to the International Labour Organization (ILO), a UN organization that protects labor standards.
The letter also urges the FCA to ask Shein to provide additional information "regarding the accuracy of their published Modern Slavery statement.
According to the Modern Slavery Act, large companies in the United Kingdom must publish an annual statement outlining the steps they have taken to ensure that no slavery or human trafficking occurs in their operations or supply chains.
The China-founded company Shein, which could achieve a market valuation of around 50 billion pounds, filed confidential documents for an IPO with the FCA earlier this month, moving a step closer to a listing in London after the company decided to abandon a planned IPO in New York.
This followed a flood of criticism in the USA, where China hawks, including Republican Senator Marco Rubio, urged the securities regulator to reject Shein's IPO application unless the company agreed to extended disclosures. Any listing would have to be approved by Chinese authorities, as the majority of Shein's employees and production facilities are based in China.
Shein privately sought to convince US politicians and regulators that its products do not contain cotton from Xinjiang, but refrained from making public statements about the region out of fear of angering Beijing, as previously reported by the Financial Times.
The USA has banned the import of cotton and other products from Xinjiang, citing "horrific abuses" of the predominantly Muslim Uyghurs in the region, who human rights groups say are being used as forced laborers in fields and factories - a claim that China categorically denies.
Stop Uyghur Genocide expects British financial institutions to uphold the high ethical standards they claim and make it clear that London is not the place for a 'no-questions-asked' approach to capital raising," said Ricardo Gama, a lawyer from Leigh Day representing Stop Uyghur Genocide.
At a minimum, regulators must ensure that laws combating modern slavery are enforced," he added.
Shein's potential IPO would be a much-needed boost for the British market. Senior politicians, including the Conservative Chancellor Jeremy Hunt and the Labour Party's Shadow Secretary for Business Jonathan Reynolds, have met with company representatives in recent months.
The Labour Party, which is leading in the polls for the parliamentary elections on July 4th, has argued that London should welcome a listing of Shein, as this would enforce higher regulatory standards for the company than elsewhere.
The FCA declined to comment on the legal letter from Stop Uyghur Genocide.
Shein, whose headquarters are in Singapore, said: "Shein has a zero-tolerance policy towards forced labor. We take transparency in our entire supply chain seriously and are committed to respecting human rights. We require our contract manufacturers to source cotton only from approved regions.
The company added: "We pay our manufacturers competitive prices so that they can pay their workers fair wages." Shein stated that an independent audit of 4,000 workers in the supplier factories in China found that they earn on average twice the local minimum wage.
