Shein’s Cotton Sourcing Policy

By Helen Reid and James Davey
LONDON (Reuters) – Online fast-fashion retailer Shein requires its contract manufacturers to source cotton only from approved regions, excluding China, for products sold in the United States, its largest market.

Approved cotton sources include Australia, Brazil, India, and the United States, along with certain countries in Europe, the Middle East, Africa, and Southeast Asia under limited cases. Yinan Zhu, Shein’s general counsel for Europe, Middle East, and Africa, provided this information in written evidence to a British parliamentary committee chair.

Zhu emphasized that this requirement is part of Shein’s compliance with the Uyghur Forced Labor Prevention Act, aimed at banning products made with forced labor in China from entering the U.S.

Shein has faced accusations regarding the use of cotton from Xinjiang, China, where the U.S. and NGOs allege forced labor and human rights violations against the Uyghur population, accusations that the Chinese government denies.

The company operates in 150 markets globally and maintains a supplier code of conduct against forced labor, but it did not clarify if the cotton sourcing restrictions extend to products sold in markets like the UK, where it plans to launch an initial public offering (IPO) in London.

Zhu stated, “We do not prohibit the use of Chinese cotton in our products specifically where such use would not contravene the laws and regulations of the jurisdictions in which we operate.”

This statement did not satisfy Labour lawmaker Liam Byrne, chair of the Business and Trade committee, conducting an inquiry into the government’s Employment Rights Bill. He expressed a need for clarity on Xinjiang cotton’s use in UK goods, asserting that British consumers and investors deserve transparency.

Byrne mentioned that the committee could summon Shein representatives for further questioning. The company uses the isotopic testing firm Oritain to verify the origins of its cotton and ensure compliance with sourcing policies. Testing in 2024 revealed that 1.3% of Shein’s cotton came from unapproved regions, but the specific regions were not disclosed.

Although Yinan Zhu participated in the parliamentary hearing on Jan. 7, she avoided answering questions about the use of cotton from China, drawing criticism from Byrne, who raised concerns with the Financial Conduct Authority (FCA) overseeing Shein’s IPO and the London Stock Exchange.

In a response to Byrne, the CEO of the London Stock Exchange stated she cannot comment on specific companies but affirmed that scrutiny for public market access ensures higher discipline and transparency than remaining private. Meanwhile, FCA Chief Executive Nikhil Rathi noted that the regulator ensures IPO prospectuses disclose legal risks and conducts background checks on firms and their leadership.

Byrne was dissatisfied with these answers and sought further information, stressing the need for safeguards against forced labor in government employment legislation linked to Shein’s potential IPO.

He stated that proper measures should be in place before Shein’s potential flotation on the London Stock Exchange to protect against forced labor practices.