Republican Senator Marco Rubio asked the US Securities and Exchange Commission to block Sheinâs bid to list publicly in New York unless the e-tailer makes additional disclosures about its business operations and âthe serious risks of doing businessâ in China.
In a letter sent Thursday to SEC Chair Gary Gensler, seen exclusively by Reuters, Rubio wrote that Sheinâs recent decision to request approval from Beijing for a prospective US IPO âraises serious doubtsâ about the accuracy of the companyâs filings. New rules passed by Chinaâs securities watchdog in 2023 allow the China Securities Regulatory Commission to vet offshore listings and block offerings that could threaten the countryâs national interests.
Shein did not immediately respond to a request for comment.
Rubio wrote that those laws raised the risk of Shein deceiving investors about the risks of its business, further complicating the companyâs efforts to present itself as an independent global retailer. While Shein is headquartered in Singapore, the company was founded in China and largely relies on thousands of the countryâs third-party contract suppliers â many based around the textile hub of Guangdong province â to manufacture its $10 dresses and $5 T-shirts.
Opposition from Rubio â who as vice-chair of the Senate Intelligence Committee has also sponsored legislation to ban Chinaâs popular social media app TikTok â is the latest political obstacle for Shein as it attempts to list publicly. Last May, a bipartisan group of US lawmakers urged the SEC to block Sheinâs IPO until it verifies it does not use forced labour.
âIf Shein wants to have access to US stock markets, then they need to play by our rules,â Rubio said in a separate statement to Reuters.
In his letter, he called on Gensler to require additional, specific disclosures from Shein regarding its business operations. Those include acknowledgement from Shein that it âhas sold apparel made with cotton fibres from the Xinjiang Uyghur Autonomous Region,â a region in far western China where rights groups and governments have accused Beijing of interning the mainly Muslim Uyghur minority group.
A 2022 Bloomberg report found that Sheinâs garments contained cotton linked to Xinjiang, but Shein has denied the accusation, saying it has âzero toleranceâ for forced labour.
Other disclosures requested by Rubio include an acknowledgement that Sheinâs business ârelies on exploiting de minimis entry,â a US trade exemption that allows the e-tailer to ship small packages worth $800 or less directly to shoppers without paying tariffs. Shein has previously told Reuters that linking the success of its business to de minimis âis just not true.â
Rubio is a sponsor of proposed legislation that would ban Chinese manufacturers from using the exemption.
By Katherine Masters; Editing by Vanessa OâConnell and Lisa Shumaker
Learn more:
Shein Backers Offer to Sell at 30% Discount as IPO Prospects Dim
Shein investors are trying to sell shares in private market deals that value the online fashion giant at as low as $45 billion, reflecting dwindling appetite for a company struggling with intensifying competition and regulatory scrutiny ahead of a long-awaited US debut.
