By Helen Reid and James Davey
LONDON (Reuters) -Online fast-fashion retailer Shein requires its contract manufacturers to only source cotton from approved regions, which do not include China, for products it sells in the United States, its biggest market, the company said on Friday.
Approved cotton sources include Australia, Brazil, India, the United States and, “in limited cases”, certain countries in Europe, Middle East and Africa, and Southeast Asia, Shein’s general counsel for Europe, Middle East and Africa Yinan Zhu said in written evidence to a British parliamentary committee chair published on Friday.
Zhu said that requirement is for Shein’s compliance with the Uyghur Forced Labor Prevention Act, legislation intended to ban products made by forced labour in China from entering the United States.
Shein has faced allegations that its products contain cotton from China’s Xinjiang province, where the U.S. and NGOs have accused the Chinese government of forced labour and human rights abuses targeting Uyghur people. Beijing denies any abuses.
Shein, which sells in 150 markets worldwide, said its supplier code of conduct prohibiting forced labour applies regardless of the country its products are sold in.
But it did not specify whether its restrictions on cotton sources applied to products sold in other markets, such as the UK, where it is planning a London initial public offering.
“We do not prohibit the use of Chinese cotton in our products specifically where such use would not contravene the laws and regulations of the jurisdictions in which we operate,” Zhu wrote.
Shein, like many other apparel retailers, uses isotopic testing firm Oritain to verify the origin of cotton in its products and check for cotton from unapproved sources.
Testing during 2024 found 1.3% of Shein’s cotton was from unapproved regions, Zhu wrote, without specifying which regions.
Zhu represented Shein at a parliamentary hearing on Jan. 7 but declined to answer lawmakers’ repeated questions about Shein’s use of cotton from China, prompting criticism from committee chair Liam Byrne who then raised concerns with the Financial Conduct Authority, which is in charge of approving Shein’s IPO, and the London Stock Exchange.
Byrne plans to write to Shein to ask again if it ships products with cotton from Xinjiang to Britain, a spokesperson for the Business and Trade committee said on Friday.
The spokesperson said Shein had failed to answer Byrne’s question in its written evidence.
In a reply to Byrne published on Friday, the CEO of the London Stock Exchange said she cannot comment on specific companies, but said the scrutiny on companies wanting to access UK public markets brings a higher level of discipline and transparency than if those companies remained privately owned.
In a separate letter, FCA Chief Executive Nikhil Rathi said the regulator aims to ensure any IPO prospectus makes all required disclosures for potential investors to understand the legal risks, and its review process also involves background checks on the company, its senior managers and board members. Rathi did not specifically mention Shein.
(Reporting by Helen Reid and James Davey; editing by Jason Neely and Louise Heavens)
