Matt Kennedy, a senior IPO strategist at Renaissance Capital, said to CNBC that "IPO investors want to see a straight-forward story." The advisor said that despite the negative publicity, the company has been very innovative with their product production. "I think that they have something that other retailers could learn from," he added. The company has no plans to make a public offer. After hearing expert testimony, the court found that the company sourced cotton and a variety of other materials in China's Xinjiang Region. Xinjiang will produce and export other products in 2021. The de minimis provision has allowed this to happen. Rep. Mike Gallagher, seated at the center, is the chair of the House Select Committee for the Chinese Communist Party. He spoke at a press conference after a GOP caucus at the offices of the Republican National Committee in Washington, D.C., Feb. 28, 2023. Rep. Elise Stefanik and Steve Scalise, both Republicans, are with him.
In June, the panel determined that "the vast majority" of the products Shein shipments to the U.S. are "less likely to be subject to the same level customs scrutiny as other retailers may face on a form entry." Shein reported that as of July, 2,1% of the cotton samples tested by Shein were positive for regions not approved. Oritain confirmed these results to CNBC. View of cotton being harvested on a field in Xinjiang in China, 10 November 2021.
Shein's spokesperson said that the positive test rate was lower than the average for the fashion industry, but any positive test was "unacceptable." Chloe Cranston is the head of Anti-Slavery International's thematic advocacy programs. She said that forced labor could still be found in other parts along the supply chain. Shein relies heavily on contracted manufacturers in China to design, manufacture and ship their products. Cranston said that the risks of Uyghur slave labor extend across many tiers. Shein audited only 1,941 of the 5,400 suppliers it had last year. Some reports claim that Shein was founded by Nanjing, China in 2008. The "About" section of its website does not mention Shein's place of birth. Shein's spokesperson confirmed that the company registered its headquarters in Singapore, and it has been there since 2021. Shein's headquarters in Singapore, June 19, 2023.
Shein's decision, made several years ago, to relocate its headquarters to Singapore and to plant seeds outside China, could pave the path for its IPO. Shang-Jin Wei is a Columbia University professor who teaches Chinese Business and Economy, Finance and Economics, and teaches at Columbia University Graduate Schools. Shein's supply chain is still largely based in China. Its move to Singapore, however, has not been enough to calm lawmakers' concerns. As long as you are in China, or on Chinese territory, the CCP is able to get you. Austin Knudsen, Montana's Attorney-General, told CNBC that he was not sure the CCP did not control all of these businesses. If the CCP asks for information or demands that your company cooperate, you will give it. The company refused to comment on whether or not it would be bound by Chinese securities laws should it seek offshore investment. Workers make clothes in a factory that supplies Shein, located in Guangzhou.
Claure, when asked if Shein's Chinese-based supply chain poses a risk to the company, said that Shein was no different than other large companies who do most of their manufacturing in China. Shein, however, is working on localizing its supply chain. It is currently building manufacturing hubs in Brazil as well as Turkey. "I do not think it is fair to say we are moving away from China. But we are getting closer to our customers. Our goal is simple: the closer we get to them, the better.