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A UK-based human rights group has launched a legal campaign to prevent online fast fashion group Shein from securing a successful listing on the London Stock Exchange.
Stop the Uighur Genocide, which claims minority Uighurs are being used as forced labor at Shein’s cotton supply in northwest China’s Xinjiang region, this week urged the Financial Conduct Authority, Britain’s financial regulator, to block Shein’s application and challenge a potential listing . legal reasons.
“Any attempt by Shein to write himself into the list. [London Stock Exchange] should be rejected,” said a statement issued by British law firm Leigh Day, which represents Stop the Uyghur Genocide. The statement added that the FCA had a “legal duty of integrity and to protect its investors”.
Leigh Day has not provided concrete evidence to support its claim that forced labor is used in Shein’s supply chain.
A letter sent to the FCA’s Leigh Day, seen by the Financial Times, said allowing the listing would be in breach of the UK’s obligations to the International Labor Organisation, the UN body that protects labor standards.
The letter also urges the FCA to ask Shein to provide further information “regarding the accuracy of the published statement on modern slavery”.
Under the Modern Slavery Act, large businesses in the UK must publish a statement each year setting out the steps they have taken to ensure that slavery and human trafficking do not occur in their operations or supply chains.
China’s Shein, which could command a market valuation of around £50bn, filed confidential IPO documentation with the FCA earlier this month, moving a step closer to listing in London following the company’s decision to abandon a planned IPO in New York. .
That followed a wave of criticism in the US, where China hawks including Republican Senator Marco Rubio lobbied the securities regulator to reject Shein’s IPO application unless the company agreed to increased disclosure. Any listing would have to be approved by Chinese authorities, as most of Shein’s employees and production are in the country.
Shein has privately tried to convince US politicians and regulators that his products do not contain Xinjiang cotton, but has avoided making public statements referring to the region for fear of angering Beijing, the Financial Times previously reported.
The US has banned imports of cotton and other products from Xinjiang, citing “horrific abuses” against the region’s predominantly Muslim Uighurs, who rights groups say have been used as forced labor in fields and factories – which China strongly denies.
“Stop the Uyghur Genocide expects UK financial institutions to uphold the high ethical standards they profess and make clear that London is not the place to come for ‘no questions asked’ access to capital,” said solicitor Leigh Day Ricardo. Gama, who stands for Stop the Uyghur Genocide.
“At the very least, regulators must ensure that laws to eradicate modern slavery are being followed,” he added.
A possible Sheina IPO would be a much-needed boost to the UK market. Senior politicians including Tory chancellor Jeremy Hunt and Labour’s shadow business secretary Jonathan Reynolds have met with company figures in recent months.
Labour, which is leading in the polls for the July 4 general election, argued that London should welcome the introduction of Shein as it would impose higher regulatory standards on the company than elsewhere.
The FCA declined to comment on the legal letter sent by Stop Uyghur Genocide.
Shein, which is based in Singapore, said: “Shein has a zero tolerance policy for forced labour. We take visibility seriously throughout our supply chain and are committed to human rights. We require our contract manufacturers to source cotton only from approved regions.”
He added: “We pay manufacturing suppliers competitive rates so they can pay their workers fair wages. Shein said an independent audit of 4,000 workers at supplier factories in China found they earned on average twice the local minimum wage.