Shein IPO faces lawsuit from workers’ rights NGO

Shein is facing further obstacles when it comes to pursuing its reported 50 billion pound IPO in the UK. NGO Stop Uyghur Genocide (SUG) is said to be considering legal options to increase pressure on the region’s Financial Conduct Authority (FCA) if a flotation is approved.

SUG has issued a 14-day deadline to the FCA to respond to its pre-action legal letter regarding Shein’s IPO, in which it threatens to launch a judicial review process. SUG has been rallying against the stock market listing since last year, when it had sent its first dossier to the British watchdog, raising concerns about alleged forced labour among the fast fashion retailer’s supply chain.

In the view of SUG, evidence of forced labour would go against the UK’s Modern Slavery Act, and thus, the organisation is calling on the FCA to block any listing application by Shein in light of such claims. The FCA has said that it is unable to legally confirm whether Shein has made any such application.

SUG has continued to stand by its statements that there is evidence linking Shein’s supply chains to cotton production in the Xinjiang region in China, where allegations of forced labour against minorities, namely Uyghur muslims, have been rife.

While China has previously denied any such practices, Shein has also claimed it only utilises cotton from approved regions for products sold in the US, the company shared in written evidence to UK lawmakers. The company said it complies with the US Uyghur Forced Labour Prevention Act (UFLPA) which prohibits the importation of products made in Xinjiang.

In early January, however, Shein came under scrutiny during a hearing with British MPs which intended to give potential investors more clarity about its supply chain. During the meeting, a representative from Shein repeatedly refused to answer questions about cotton produced in China, stating only that they believed it was “compliant with relevant UK laws”.

In its dossier, SUG said it was concerned about Shein’s inability to answer specific questions regarding its supply chain, and thus undermined the reliability of its UK Modern Slavery Statement. The organisation noted that if the FCA opts to approve of the IPO filing or admits the company to the official list, a judicial review would be launched to counter what it says would be a violation of legal obligations to ensure the watchdog meets its integrity requirements.