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    'Nefarious' Attorneys General Say Popular Clothes Website SHEIN May Be Exploiting Its Workers

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    Dan Lehr
    16 state Attorneys General express concerns to the SEC Chair about the potential IPO of SHEIN, citing credible reports that the company's rapid growth was enabled by forced labor and intellectual property theft. They request that the SEC require independent certification of compliance with laws banning imported goods made with forced labor before approving SHEIN's IPO. The AGs believe American exchanges should have a zero-tolerance policy for foreign companies refusing to follow US laws, especially regarding serious human rights abuses.

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    'Nefarious' Attorneys General Say Popular Clothes Website SHEIN May Be Exploiting Its Workers

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    Dan Lehr
    14K views4 pages
    16 state Attorneys General express concerns to the SEC Chair about the potential IPO of SHEIN, citing credible reports that the company's rapid growth was enabled by forced labor and intellectual property theft. They request that the SEC require independent certification of compliance with laws banning imported goods made with forced labor before approving SHEIN's IPO. The AGs believe American exchanges should have a zero-tolerance policy for foreign companies refusing to follow US laws, especially regarding serious human rights abuses.

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    16 state Attorneys General express concerns to the SEC Chair about the potential IPO of SHEIN, citing credible reports that the company's rapid growth was enabled by forced labor and intellectual property theft. They request that the SEC require independent certification of compliance with laws banning imported goods made with forced labor before approving SHEIN's IPO. The AGs believe American exchanges should have a zero-tolerance policy for foreign companies refusing to follow US laws, especially regarding serious human rights abuses.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    14K views4 pages

    'Nefarious' Attorneys General Say Popular Clothes Website SHEIN May Be Exploiting Its Workers

    Uploaded by

    Dan Lehr
    16 state Attorneys General express concerns to the SEC Chair about the potential IPO of SHEIN, citing credible reports that the company's rapid growth was enabled by forced labor and intellectual property theft. They request that the SEC require independent certification of compliance with laws banning imported goods made with forced labor before approving SHEIN's IPO. The AGs believe American exchanges should have a zero-tolerance policy for foreign companies refusing to follow US laws, especially regarding serious human rights abuses.

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    © All Rights Reserved
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    of 4

    August 24, 2023

    Mr. Gary Gensler


    Chair
    U.S. Securities and Exchange Commission
    100 F Street, NE
    Washington DC 20549

    Dear Chairman Gensler:

    We write to you in our capacity as the Attorneys General of 16 states to express sig-
    nificant concerns about the potential Initial Public Offering (IPO) by SHEIN, the
    China-backed “fast fashion” retailer. SHEIN’s growth has been built on nefarious
    business practices.

    Although it recently moved its official headquarters to Singapore, SHEIN was


    founded in Nanjing, China in 2008 and continues to heavily rely on its vast supply
    chain and manufacturing network in China. Over the years, SHEIN has become the
    world’s largest fashion retailer with an estimated value of $64 billion and its mobile
    app is currently the fourth most downloaded app in the United States. The company
    is also one of TikTok’s largest advertisers and pays thousands of social media “influ-
    encers” to market its wares to consumers via short and addictive videos on TikTok.

    While the advertising puts a bright face on the company, there is a dark side to its
    rapid growth. Various government, watchdog, and media reports have alleged that
    its rise has been “made possible by forced labor, human rights violations, stealing
    other designers' work and the peddling of clothing made with potentially hazardous
    materials.” 1

    SHEIN collects an enormous quantity of data on American consumers, which it feeds


    into complex algorithms in near real-time to fine tune its offerings and bring new

    1 See, e.g., https://www.npr.org/2023/06/30/1184974003/shein-influencers-china-factory-trip-back-

    lash;%20https://www.bloomberg.com/news/articles/2023-07-12/shein-influencer-trip-is-the-latest-
    threat-to-its-ipo-plans?in_source=embedded-checkout-banner

    DEPARTMENT OF JUSTICE
    215 North Sanders (406) 444-2026
    PO Box 201401 [email protected]
    Helena, MT 59620-1401 mtdoj.gov
    Mr. Gary Gensler
    August 24, 2023
    Page 2

    products to market faster than its competitors. Its network of putatively independent
    suppliers allows it to immediately create or exploit trends —often blurring the lines
    of intellectual property and copyright —while simultaneously off-loading responsibil-
    ity to its manufacturing partners. Additionally, SHEIN utilizes Section 321 of the
    Tariff Act of 1930, known as the “de minimis exception” which allows importers to
    avoid customs duties on incoming packages that are valued at less than $800. 2

    Most worryingly, SHEIN has been credibly accused of exploiting forced labor and vi-
    olating the Uyghur Forced Labor Prevention Act, Public Law No. 117-78. 3 Independ-
    ent testing conducted last year by Bloomberg News found significant scientific evi-
    dence that cotton produced in the Xinjiang Autonomous Region was present in cloth-
    ing sold by SHEIN. 4 The U.S. House of Representatives Select Committee on the
    Chinese Communist Party is currently investigating the business practices of SHEIN
    and other fashion companies for UFLPA violations. 5 The Committee’s interim find-
    ings noted that because the vast majority of products shipped from SHEIN to Amer-
    ican consumers fall under the de minimis exception, the shipments are less likely to
    face the same customs scrutiny as other retailers.

    In response, SHEIN refuses to engage with U.S. government officials and is instead
    touting a purported self-financed and managed certification process that it claims
    demonstrates compliance with U.S. law. 6 Such self-certification is insufficient.
    SHEIN has a documented history of lying about its labor practices. 7 Moreover, even
    SHEIN’s press tours with a carefully curated group of influencers meant to highlight
    how SHEIN claims it has brought its supply chain aboveboard, resulted in significant
    backlash and highlighted significant reasons for concern. 8 Feeling the pressure of

    2 https://selectcommitteeontheccp.house.gov/sites/evo-subsites/selectcommitteeon-
    theccp.house.gov/files/evo-media-document/fast-fashion-and-the-uyghur-genocide-interim-find-
    ings.pdf
    3 Section 307 of the Tariff Act of 1930 also prohibits importing into the U.S. any product mined, pro-

    duced, or manufactured wholly or in part by forced labor.


    4 https://www.bloomberg.com/news/features/2022-11-21/shein-s-cotton-clothes-tied-to-xinjiang-china-

    region-accused-of-forced-labor#xj4y7vzkg
    5 https://selectcommitteeontheccp.house.gov/sites/evo-subsites/selectcommitteeon-

    theccp.house.gov/files/evo-media-document/fast-fashion-and-the-uyghur-
    genocide-interim-findings.pdf
    6 https://www.politico.com/news/2023/06/05/shein-china-forced-labor-claims-lobbying-fast-fashion-

    00100065
    7 https://www.reuters.com/business/retail-consumer/exclusive-chinese-retailer-shein-lacks-disclo-

    sures-made-false-statements-about-2021-08-06/
    8 https://www.npr.org/2023/06/30/1184974003/shein-influencers-china-factory-trip-backlash;

    https://www.bloomberg.com/news/articles/2023-07-12/shein-influencer-trip-is-the-latest-threat-to-its-
    ipo-plans?in_source=embedded-checkout-banner
    Mr. Gary Gensler
    August 24, 2023
    Page 3

    this widespread scrutiny, SHEIN has turned to Washington lobbyists to whitewash


    its image. 9

    It is apparent that SHEIN is attempting to launch an IPO before the end of this cal-
    endar year. An IPO of this magnitude—involving a foreign-owned company that is
    facing credible concerns about its core business practices—cannot move forward on
    self-certification alone. We urge you to require, as a condition of being listed on a U.S.
    based securities exchange, that any foreign-owned company certify via a truly inde-
    pendent process that it is compliant with Section 307 of the Tariff Act of 1930, which
    prohibits the import of any product manufactured wholly or in part by forced labor.
    We further request that you notify the national securities exchanges registered under
    Section 6 of the Securities Exchange Act of this requirement.

    American exchanges should have a zero-tolerance policy for foreign companies that
    seek access to our markets but refuse to follow our laws, especially when the impli-
    cated laws are meant to prevent serious human rights abuses. We believe in uphold-
    ing the rule of law and protecting our economy. Lip service is not enough; in this case,
    the U.S. Securities and Exchange Commission must “trust, but verify” that every
    such company is complying before it receives the privilege of being listed on an Amer-
    ican securities exchange.

    Sincerely,

    Austin Knudsen
    Attorney General to Montana

    Treg Taylor Tim Griffin


    Attorney General of Alaska Attorney General of Arkansas

    Christopher M. Carr Raúl Labrador


    Attorney General of Georgia Attorney General of Idaho

    9https://www.politico.com/news/2023/06/05/shein-china-forced-labor-claims-lobbying-fast-fashion-
    00100065
    Mr. Gary Gensler
    August 24, 2023
    Page 4

    Brenna Bird Jeff Landry


    Attorney General of Iowa Attorney General of Louisiana

    Lynn Fitch Andrew Bailey


    Attorney General of Mississippi Attorney General of Missouri

    Mike Hilgers Drew Wrigley


    Attorney General of Nebraska Attorney General of North Dakota

    Gentner F. Drummond Alan Wilson


    Attorney General of Oklahoma Attorney General of South Carolina

    Jonathan Skrmetti
    Sean Reyes
    Attorney General of Tennessee
    Attorney General of Utah

    Jason Miyares
    Attorney General of Virginia

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