House Committee Chair Probes Shein Over Data Protections and Ties with China

The House Select Committee on China has recently heightened its scrutiny of Shein, a fast fashion giant with substantial ties to China, raising concerns about the company’s data protection policies and its relationship with the Chinese market.

Committee’s Inquiries into Shein’s Operations

• Letter to Shein: The House Select Committee on China sent a letter to Shein and other fast fashion retailers, seeking detailed information about their supply chains and any products imported from the Xinjiang region of China. This action reflects growing concerns about the potential use of forced labor and the implications for U.S. consumers and data privacy.
• Focus on Xinjiang Cotton: Policymakers’ concerns intensified following reports that lab tests showed Shein’s clothes were made with cotton from Xinjiang. This revelation brought into question Shein’s compliance with U.S. laws prohibiting imports from regions associated with human rights abuses.
• Shein’s Response: Shein initially did not comment on the test results but later reported that their third-party analyses demonstrated that the majority of their cotton did not originate from Xinjiang. Despite this, about 2.1 percent of their cotton was found to be sourced from the northwest Chinese region or other unapproved areas.

The Impact on Shein’s Business Practices

• Criticism from Lawmakers: The committee’s investigation, led by Chair Mike Gallagher, has put Shein’s business practices under a microscope. Gallagher expressed skepticism about Shein’s claims, questioning the acceptability of their labor practices and their transparency about the origins of their products.
• Implications for Potential IPO: Rep. Raja Krishnamoorthi, a leading Democrat on the House China committee, highlighted the extensive disclosure requirements Shein would face if it decides to list on U.S. stock exchanges. He emphasized the importance of Shein being transparent about its supply chain practices, which would be crucial for any future public offering.

The Broader Context

The House Select Committee on China’s focus on Shein is part of a broader effort to address concerns over forced labor, data protection, and the influence of Chinese businesses on global markets. These inquiries into Shein’s operations signify a growing scrutiny of international companies with significant ties to China, especially in sensitive sectors like fashion, where supply chain transparency is crucial. As the investigation unfolds, it will likely have significant implications for Shein and similar companies operating in the global market, underlining the importance of adherence to ethical standards and transparency in business practices.