RE: FT HEADLINE TODAY2 Feb 2024 11:12
Shein was valued at more than $60bn in its most recent private fundraising, which, if maintained in an IPO, would make it the most valuable company to go public in the US since Uber in 2019. It filed a confidential preliminary prospectus with regulators late last year.
However, the deal is facing intense scrutiny from lawmakers and regulators. Dozens of members of Congress and state attorneys-general have questioned whether Shein’s supply chain is free of forced labour. They have also criticised it for using a loophole to avoid import taxes by shipping low-value packages directly to consumers.
Shein this week said it had a “zero-tolerance policy” towards forced labour and was “committed to respecting human rights”. It also said it was “working closely with industry peers and policymakers” to help reform the contentious import tax rules.
Rick Scott, a Republican senator from Florida, told the Financial Times he would not stop fighting to keep Shein from listing on US exchanges.
Scott said: “Shein’s lack of transparency, seemingly illegal business practices and allegations of unethical conduct, like IP theft, may be OK in Communist China but won’t fly in the United States. Shein is bad news from any angle you look at it.”
Amid pressure, the company has been paying out more for lobbying in Washington. Disclosures released last week showed the company spent $3mn in 2023, more than 10 times the amount reported in 2022.
At least 93 different designers and companies have filed lawsuits in US federal courts against Shein for alleged copyright or trademark infringement since 2018, according to a Financial Times analysis, including at least 30 new cases filed last year. Retail giants H&M and Fast Retailing, which owns Uniqlo, have also launched lawsuits against Shein in Hong Kong and Japan, respectively.
The majority of the cases against Shein ended with settlements whose terms were not disclosed, making it difficult to assess any financial costs to the company.
Philippa Loengard, director of the Kernochan Center for Law, Media and the Arts at Columbia Law School, said settlements in similar copyright cases “tend to be handsome to the artists. Possibly more lucrative than a licence agreement would have been”.
“This [issue] is not new, but the scale is larger than others in the past, even among other fast-fashion outlets,” she added.
At least 10 businesses have sued Shein more than once, including Deckers, a shoemaker with a $20bn market capitalisation, and Oakley, the sunglasses brand owned by €80bn eyewear giant EssilorLuxottica
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