Columns
Blaine’s Bulletin: Exposing Shein’s Heinous Business Model
Washington,
December 1, 2023
You’ve probably heard of Shein. It’s a fast-fashion company that sells cheap versions of popular clothing and has gained massive traction on social media. After all, who isn’t looking for a good deal? At a time when inflation has tightened budgets and Christmas shopping is in full force, I understand the appeal of cheap, trendy products. Browsing across the site, you wouldn’t know the dark story behind Shein’s inventory. Typically, I wouldn’t dedicate a bulletin to informing you about a specific business’ developments, but this particular company warrants extreme caution from regulators, customers, and investors. Shein is attempting to go public on US exchanges, which means their stock would trade on our stock market. In order for that to happen, the Securities and Exchange Commission (SEC) will conduct a review of the business to determine if it meets the legal requirements of our public markets. I’m urging the commission to apply maximum scrutiny in its review, as Shein’s products bear direct ties to slave labor. Last year, Bloomberg reported on forensic evidence connecting Shein’s cotton to a Chinese region notorious for government-operated forced labor camps. When asked, Shein didn’t dispute Bloomberg’s findings. Company representatives simply said they “comply with local laws and regulations.” That means next to nothing when dealing with the Chinese Communist Party. Recognizing the overwhelming evidence, the US banned imports from the region, causing many companies to cut ties with the CCP or at least prove they aren’t using slaves. Shein, on the other hand, exploits a loophole, shipping individual orders under the radar to avoid triggering transparency requirements. Other retailers, like GAP and H&M, pay import duties and undergo vetting of shipments to affirm they are following the law. Shein goes out of its way to avoid it. I am a member of the Select Committee on the Chinese Communist Party. We recently released a report showing Shein paid zero import duties last year and managed to avoid submitting data that could blow the cover on a nefarious business model. However, we must not be naïve when it comes to human rights abuses. Scientists concluded Shein’s cotton must have originated in an area of China where authorities torture, rape, and force detainees to produce clothing for no pay. Most of these enslaved people are Uyghur Muslims, an extremely marginalized group subjected to inhumane treatment and downright heinous abuse. The US State Department and the United Nations have formally recognized these serious human rights violations. Meanwhile, Shein claims to have visibility across its supply chain but cannot defend or explain the correlation between its products and forced labor camps. Accessing US markets and capital is a privilege, and we rely on the SEC to root out undeserving companies. I sincerely hope the officials at the commission will diligently review Shein to ensure American capital will not fund crimes against humanity. As I mentioned, this is not the sort of matter I usually cover in my weekly letter. However, given the values we share, I thought you’d want to know about this company’s egregiousness as it makes headlines over the coming months. This is the type of issue I work on every day, across multiple committees, to protect our markets and combat ill-intentioned foreign entities. I appreciate your willingness to consider the facts behind Shein’s business model and be a well-informed consumer. |