The online fashion seller Shein has admitted it found two cases of child labour and factories failing to pay the minimum wage in its supply chain last year, as it tries to gain backing for a potential £50bn UK stock market flotation.
The disclosure, in Shein’s 2023 sustainability report comes after workers’ rights campaigners called for the government to oppose a possible listing of Shein on the London Stock Exchange over concerns about a lack of transparency about its supply chain and ethical questions. The British Fashion Council (BFC) has also said the listing, which could be announced as early as next month, would be a “significant concern” to the industry.
An investigation this year by the Swiss-based non-profit group Public Eye found that people employed to produce garments for Shein routinely work more than 70-hour weeks; there were allegations of forced labour in the Uyghur region of China; and the company had a “cavalier approach to design appropriation”, which has led to a string of lawsuits relating to allegedly copied garments.
The company’s plans to list in New York were derailed after US lawmakers raised concerns about alleged labour malpractices and lawsuits from competitors. However, Shein has yet to face formal opposition in the UK. The retailer reportedly filed papers to float on the London Stock Exchange in June, and secured support for a such a move from the Labour party weeks before the July election.
Shein, based in Singapore but founded in China, said it had tightened its policies for suppliers in October last year so that any child labour or forced labour violations have become grounds for immediate termination of contracts, as first reported by the Times.
Annabella Ng, senior director of global government relations at Shein in Singapore, said the updated supply chain policy took into account feedback from regulators and suppliers.
It suspended for 30 days orders from the Chinese suppliers involved to the child labour it had identified, giving them a chance to tackle the problem. Shein said it did not resume business with them until they had stepped up efforts to stop the practice.
Shein’s report said: “Both cases were resolved swiftly, with remediation steps including terminating contracts with underage employees, ensuring the payment of any outstanding wages, arranging medical checkups and facilitating repatriation to parents/legal guardians as needed.
“Following appropriate remediation, the contract manufacturers were permitted to resume business.”
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The company’s report also says that it found that 0.5% of the suppliers checked by its independent auditing partner in China had failed to pay employees the local minimum wage or delayed wage payments. It said in all cases the “errant practices found” were dealt with swiftly.
Shein is thought to be preparing a prospectus for approval with the Financial Conduct Authority ahead of a rumoured £50bn float on the London Stock Exchange. Potential plans reportedly include offering shares to its shoppers, an idea adopted by the takeaway delivery company Deliveroo ahead of its ill-fated initial public offering in 2021.