After facing roadblocks in its attempt to go public on the New York Stock Exchange, Chinese fast-fashion giant SHEIN has turned its focus to a London IPO, only to face yet another wave of controversy. Despite its staggering $60 billion valuation, SHEIN is struggling to gain acceptance in global markets – so why is it facing obstacles at every turn? At its core, the backlash underscores a deeper issue with China’s exploitative labour model: a business established on modern slavery will find it increasingly difficult to thrive on the global stage, regardless of how smart its branding is.
Ties to the Chinese Government: A Lingering Stigma
It’s an open secret that Chinese companies, including private enterprises, remain under the strict control of the Chinese Communist Party and must cooperate with the Chinese government’s political propaganda and diplomatic needs. In an attempt to distance itself from Chinese identity, SHEIN relocated its headquarters to Singapore, deregistering multiple Chinese firms, and rebranding itself as a global company. However, SHEIN still relies largely on Chinese supply chains and is subject to Chinese government regulations on overseas listings. SHEIN’s active partnership TikTok to boost user engagement during the COVID-19 pandemic further highlighted its ties to China’s state-controlled economic ecosystem. It haunts its reputation, even as it seeks a foothold in Western markets.
Rising Global Pushback Against Forced Labour
SHEIN’s listing struggles are more than simply geopolitics; they reflect a fundamental shift in how global markets and consumers evaluate corporations. For decades, global firms profited from China’s sweatshops and authoritarian policies, fueling both big brand profits and China’s economic rise. However, growing global concerns over labour, human rights, and sustainability are driving calls for greater corporate accountability. Despite this shift, SHEIN continues to use exploitative employment practices, putting it at odds with international ethical standards and risking severe backlash. While major brands like NIKE, ADIDAS, and UNIQLO have already publicly boycotted Xinjiang cotton to protect their reputation, SHEIN faced widespread criticism for its lack of supply chain transparency. The company has yet to declare whether its products use forced labour, particularly concerning cotton sourced from Xinjiang.
Governments Tighten Regulations on Unethical Supply Chains
Governments worldwide have responded to these growing concerns by tightening regulations against unethical supply chains. The EU’s Corporate Sustainability Due Diligence Directive, the UK’s Modern Slavery Act, and the bans on forced labour imports by the US and Canada reflect a collective push to ensure that companies uphold ethical supply chain standards. This shift has intensified scrutiny of companies like SHEIN, who are now being questioned not just about their political affiliations, but about the very foundation of their business model.
SHEIN’s evasiveness on the issue has only worsened its credibility. When questioned in the UK Parliament, company executives refused to confirm whether forced labour was used in their supply chain, merely stating that SHEIN does not directly own any factories. Lawmakers condemned this response as “willful ignorance,” further damaging the company’s reputation.
Upgrading China’s Sweatshop Economy: No Real Progress
Over a decade ago, the Chinese government sought to upgrade Guangdong’s industry and labour policies. However, the outcomes fell short of expectations. SHEIN’s supplier conditions reveal that China has yet to move beyond the sweatshop model. A recent BBC investigation into SHEIN’s suppliers in Guangzhou revealed the harsh realities faced by workers, including gruelling 14-hour shifts and wages so low that workers are forced to endure extreme overtime to make ends meet. Behind the success of fast fashion lies extreme labour exploitation, sustained by political repression, including the denial of workers’ rights to form unions or go on strike, preventing collective resistance. As SHEIN’s London IPO moves forward, more exposés on its abusive practices are likely to emerge.
SHEIN’s Struggles: A Sign of the End for China’s Labour Model?
SHEIN’s difficulties in securing a public listing in the US and UK are not isolated incidents. The core issue isn’t just about one company—it reflects a deeper flaw in China’s economic system, which thrives on authoritarian control and labour exploitation. For years, China’s low-cost manufacturing model dominated global supply chains, but as governments and consumers demand higher ethical standards, companies that refuse to adapt will struggle to survive. SHEIN’s predicament may well be a warning sign that China’s exploitative labour model is reaching its breaking point.