Shein’s Xinjiang Links Have Lawmakers Asking Questions

Date: Monday, February 13, 2023
Source: Sourcing Journal

Does Shein use forced-labor cotton from China’s controversial Xinjiang region? Three U.S. senators, for one, want to know.

“We are concerned that American consumers may be inadvertently purchasing apparel made in part with cotton grown, picked and processed using forced labor,” wrote Republican Bill Cassidy of Louisiana and Democrats Elizabeth Warren of Massachusetts and Sheldon Whitehouse of Rhode Island in a letter dated Feb. 9 to Chris Xu, the Chinese e-tail phenom’s publicity-shy CEO.

Cassidy, Warren and Whitehouse said they were following up with a November Bloomberg report that used isotopic testing to find traces of Xinjiang cotton in garments ordered from Shein—pronounced “she-in”—on two separate occasions.

The Gen Z darling, whose $19 dresses and $11 swimsuits have made it the toast of TikTok, didn’t dispute the results at the time. Nor did it say whether it used cotton from the northwestern territory, where the Chinese Communist Party (CCP) has carried out a systematic campaign of repression against Uyghurs and other Turkic Muslim minorities. Instead, Shein said it takes steps in all its global markets “to ensure we comply with local laws and regulations.”

The lawmakers are now seeking answers from the world’s most Googled fashion company, ideally within the next 30 days, to “assist in our oversight” of Sections 307 of the 1930 Tariff Act, which bans any product mined, produced or manufactured wholly or in part by forced labor from being imported into the United States. They also expressed concern that Shein may be “pursuing a strategy” to price shipments under de minimis value to avoid scrutiny under the exemption provided by Section 321.

“Cotton is designated as a ‘high priority sector’ in statute for enforcement,” the senators said of the Uyghur Forced Labor Prevention Act (UFLPA), a U.S. regulation that prohibits all products from Xinjiang on the rebuttable presumption that they are tainted with modern slavery.

“Xinjiang’s cotton lint production provides for over 85 percent of China’s total cotton production and 20 percent of global output,” they wrote. “Considering Shein’s large, decentralized network of suppliers, we are concerned that cotton fibers harvested in Xinjiang with forced labor may have entered Shein’s supply chains.”

Cassidy, Warren and Whitehouse cited Shein’s rapid speed to market as a cause for caution. “Considering that Shein can produce an item of clothing—from design to packaging and shipping—within 3-5 days, how does the company ensure that none of its garments are produced with forced labor?” they asked.

Shein said that it takes visibility across its supply chain “seriously,” is committed to respecting human rights and has “zero tolerance” for forced labor.

“To further ensure compliance with U.S. laws, Shein requires that our suppliers purchase cotton from Australia, Brazil, India, U.S and other approved regions,” it told Sourcing Journal. “We have built and implemented a traceability management system that gives visibility to the origins of cotton throughout the entire production process. All vendors, from fabric suppliers to finished product suppliers, are integrated to the system, ensuring we can trace the origins of cotton at every step of the process.”

The Christian Siriano collaborator also said it engages third-party firms, such as BV, TÜV, ITS, SGS and Openview, to conduct regular, unannounced audits of supplier facilities to ensure compliance with its code of conduct. Oritain, it added, provides independent testing and origin verification for cotton and cotton-containing products to “help us ensure continued compliance with U.S. laws and regulations.”

Allison Gill, forced labor program director at the Global Labor Justice-International Labor Rights Forum, a member of the Coalition to End Forced Labour in the Uyghur Region, said that the senators are asking Shein the right questions.

“Essentially, they’re asking Shein to map and disclose its supply chain, which, of course, is the only way that a company can be sure that it isn’t using tainted content,” Gill said. “I think it’s really timely that they’re speaking out on Shein now because a really critical issue related to enforcement of the UFLPA is that many Shein goods come in as small packages [delivered] direct to consumer, and so they fall under the de minimis customs regulation, which means that they are essentially released from customs scrutiny.”

Another potential loophole, she noted, is the fact that only ocean freight manifests are subject to mandatory disclosure in the United States. Customs data from rail, road and air remain largely obfuscated, making it challenging for researchers and journalists to dig up potential forced labor risks. Shein products are mostly shipped directly from its factories in China by air, though this may change as it rapidly expands its distribution network in California and Indiana.

“So that means there’s a huge swath of data that we don’t have access to,” Gill said.

To be sure, the most downloaded retail app, which was once pegged at $100 billion but is now valued at a more modest $70 billion to $85 billion, is no stranger to scandal, particularly on the workforce front. Though Shein, like most brands, doesn’t own its own factories, it has fielded several allegations of worker exploitation, most recently from a British broadcaster that found employees toiling 18-hour days, with only one day off per month, for as little as 3 cents per hour.

Shein revealed in December that an independent review conducted by Intertek and TÜV dismissed most of the claims made by the report, including those relating to withheld salaries and docked wages for minor infractions. What the audit did confirm, however, was an issue with working hours. Despite being “significantly less than claimed,” they were still “higher than local regulations permit,” it said. The offending suppliers were told to shape up or risk termination.

At the same time, the company said that it will be spending $15 million over the next three to four years to upgrade hundreds of its factories. It will also be doubling the $2 million it currently invests in its Shein Responsible Sourcing program, bumping up the frequency of independent factory audits, including unannounced spot-checks and training on its code of conduct.

But such audits would be “inadequate” if state-sponsored forced labor was in any way involved, said Adrian Zenz, the German anthropologist who specializes in China’s persecution of Uyghurs. State-sponsored forced labor, he told Sourcing Journal, creates a “systematically coercive environment in which targeted groups are mobilized through extensive and coercive grassroots recruitment efforts.”

“The companies where these groups work may not feature additional security measures beyond regular surveillance equipment,” Zenz said. “In Xinjiang, that is particularly true because of the highly securitized and surveilled wider social environment that precludes free movement. Consequently, references to unannounced audits are basically meaningless.”

Shein insists that it has no nexus to Xinjiang. Given that nearly 90 percent of China’s cotton is now produced in Xinjiang, however, it is difficult to believe that the e-tailer is “not in some way implicated in Uyghur forced labor,” he added.

Laura T. Murphy, professor of human rights and contemporary slavery at the Helena Kennedy Centre for International Justice at Sheffield Hallam University, said that it was “heartening” to see Congress take a stand against the “black box of information” that “fast fashion giants like Shein benefit from.”

Xinjiang cotton, in particular, has benefited from an export strategy that “obscures cotton’s origin,” Murphy noted in a 2021 study about transnational “cotton laundering.” Without enhanced supply-chain mapping, goods made with forced labor will continue to slip through the cracks, whether intentionally or not. More transparency from Shein will always be welcome.

“It is incredibly difficult to know anything about its supply chains, labor conditions or materials sourcing,” she said. “I hope this inquiry will finally shine some light on Shein.”

And not just on Shein, said Elfidar Iltebir, president of the Uyghur American Association.

“We appreciate the bipartisan effort from the Hill, as well as the efforts of investigative journalists, to hold China accountable and ensure the UFLPA is fully enforced,” she told Sourcing Journal. “We need to keep up this pressure; otherwise, the CCP will continue to profit from its genocide and inhumane forced labor practices against Uyghurs through these Chinese companies and put American consumers at risk of complicity.”


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