The London Stock Exchange (LSE) faces increasing pressure to clarify its vetting processes for firms seeking to list, following fast-fashion giant Shein's refusal to address critical questions about its supply chain. The controversy emerged after Shein submitted initial paperwork for a UK listing, potentially valuing the company at a staggering £50 billion. However, the retailer has been accused of incorporating forced labour in its products, particularly cotton sourced from the Xinjiang region in China, where significant human rights abuses have been reported.
During a recent session with the Commons' Business and Trade Committee, Shein's legal representative, Yinan Zhu, repeatedly avoided confirming whether the company sold products containing cotton from the contentious region, frustrating MPs who deemed the lawyer's responses as "ridiculous."
"The committee was profoundly concerned at the lack of candid and open answers to some extremely simple, basic questions about the integrity of Shein's supply chain." – Liam Byrne
The issue of forced labour in Xinjiang is not new. China has faced accusations of subjecting Uighur Muslims, a predominantly Muslim ethnic minority, to forced labour practices. Research from December 2020 indicated that up to half a million individuals were coerced into cotton picking in the region. Despite these allegations, Beijing has consistently denied any human rights abuses.
Shein, originally founded in China but now headquartered in Singapore, has rapidly ascended as one of the world's leading fast-fashion retailers, distributing products to customers across 150 countries. However, this success is now marred by serious allegations and scrutiny.
"In the light of this I would be grateful if you would let me know what checks, if any, the London Stock Exchange has in place to authenticate statements by firms seeking to list, with particular regard to their safeguards against the use of forced labour in their products." – Liam Byrne
The gravity of these allegations prompted the Business and Trade Committee to write to both the LSE and the Financial Conduct Authority (FCA), urging them to examine the checks conducted on UK-listed companies. The committee seeks assurance that these companies disclose any legal risks associated with forced labour.
Shein's business model involves collaboration with an extensive network of suppliers predominantly based in China, along with others in Turkey and Brazil. Unlike some other fashion brands such as H&M, Nike, Burberry, and Adidas, which have distanced themselves from Xinjiang cotton due to forced labour claims, Shein denies any involvement with forced labour.
"The committee would like to draw your attention to the concerning evidence we heard," – Liam Byrne
The refusal of Shein's lawyer to address supply chain concerns has led MPs to accuse her of "wilful ignorance." The situation has intensified calls for transparency and accountability in how firms ensure ethical sourcing and labour practices. As other major brands face backlash and boycotts in China for similar issues, the spotlight remains firmly on Shein's next steps.