Florida Pol Wants to Squash Shein IPO Pending More Disclosures
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One of Shein’s many foes has struck again.
In an effort to derail the reported U.S. IPO that the fast-fashion mogul seeks, Senator Marco Rubio, R-FL, wrote a letter to Gary Gensler, commissioner of the U.S. Security and Exchange Commission (SEC) requesting that it require extraordinary disclosures from Shein—or block the IPO proceedings altogether.
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In the letter, Rubio shared his concerns over reports that Shein had approached Beijing’s watchdog to get approval for a U.S. IPO.
“News reports indicate that Shein approached regulators in the People’s Republic of China (PRC) to gain approval of its IPO. This revelation makes virtually certain that the Chinese government will censor Shein’s filing documents to hide pertinent information from U.S. regulators and investors about the extent and nature of its operations in the PRC, as well as the risks of doing business in the PRC,” he said in the letter.
He argued that, though the e-commerce giant shifted its headquarters to Singapore in 2022, it still has serious roots in China, noting its employee base there and its ties to the Chinese government. Despite those ties, the Christian Siriano collaborator has been working to expand its presence in North America. It recently opened a new office just outside of Seattle in Bellevue, Wash.
The senator, who helped to author the Uyghur Forced Labor Prevention Act (UFLPA), which bars goods wholly or partially made in China’s Xinjiang Uyghur Autonomous Region (XUAR) because of the region’s use of slave labor, has long been an adversary of the Singapore-based company.
In the past, he has slammed Shein’s use of the de minimis loophole, a backdoor policy exception which allows the e-commerce juggernaut to import packages worth less than $800 without scrutiny from the Department of Homeland Security or Customs and Border Protection.
In his most recent gripe, Rubio urged the SEC to put a number of stipulations on a potential IPO. If the senator had it his way, Shein would be required to acknowledge that “a majority” of its operations are in China and the company is “subject to the whim of the Chinese government and, by extension, the CCP”; admit that it has sold apparel made with cotton from the XUAR; note that it “has infringed the copyrights of its competitors in the apparel industry, and is subject to protracted and costly legal disputes about the same” and more.
Shein has said it no longer sources cotton from China, though it has been linked to forced labor in the past. It is currently involved in a number of copyright infringement suits, including one from Victoria’s Secret-backed apparel company For Love and Lemons and another from fast-fashion brand Uniqlo.
Rubio said if the SEC chooses not to mandate the company to disclose the information he outlined—or if Shein refuses to meet the demand of the disclosures—then the regulatory entity should block the Gen Z favorite’s IPO completely.
The legislator said his interest lies partly in protecting American investors from a company that could go under because of risks affiliated with doing business in China.
“These disclosures are true and essential for anyone to fairly appraise the risk of investing in Shein. It is reasonable to ask whether any company so closely tied to an adversary nation should be able to raise funds in our capital markets, but as long as they are, transparent and exhaustive disclosures are the minimum price of admission. If Shein refuses to make these disclosures, then I urge you to protect U.S. investors by blocking Shein’s IPO,” Rubio wrote in his letter.
As Rubio and others continue to debate the merit of a Shein IPO, once reportedly valued at $60 billion but now reportedly worth closer to $45 billion, the fast-fashion e-tailer’s competitors have only ramped up their game.
The Financial Times reported this week that Temu, a direct competitor of Shein, has been snatching up suppliers that Shein severed ties with. The ultra-low goods purveyors have a high degree of competition—and animosity—between them, especially as lawsuits between the two continue.
Shein did not return Sourcing Journal’s request for comment.
