By Helen Reid and James Davey
LONDON (Reuters) - A Shein representative declined to provide a direct answer when asked by a British parliamentary committee on Tuesday whether the online fast-fashion retailer uses cotton from China or from its Xinjiang province, a key issue for potential investors concerned about its supply chain.
The repeated refusal by Shein's general counsel for Europe, Middle East and Africa (EMEA), Yinan Zhu, to answer lawmakers' questions "bordered on contempt" for the cross-party business and trade committee, said Liam Byrne, the committee chair.
Singapore-headquartered Shein, which was founded in China in 2012, is awaiting regulatory approvals for an initial public offering (IPO) from both Britain's Financial Conduct Authority and China's securities regulator.
Asked about Shein's supply chain, Zhu said: "The suppliers we work with, they are based in China, in Turkey and Brazil, and obviously many of them are in China."
She asked the committee for permission to write to them about further questions, when pressed further on whether the company sources cotton from China and specifically from its Xinjiang province.
When asked about the IPO, Zhu said she was not able to comment.
"For a company that sells a billion pounds to UK consumers, and for a company which is seeking to float on the London Stock Exchange (LON:LSEG), the committee has been pretty horrified by the lack of evidence that you have provided today," said Byrne, who appeared visibly exasperated as the hearing progressed.
"You've given us almost zero confidence in the integrity of your supply chains. You can't even tell us what your products are made from. You can't tell us much about the conditions which workers have to work in, and the reluctance to answer basic questions has frankly bordered on contempt of the committee."
When asked whether the company was confident it was in compliance with the UK Modern Slavery Act, Zhu said: "Our position is we are compliant with relevant UK laws."
CHINESE CONSUMER RISK
Shein has faced allegations that its products contain cotton from China's Xinjiang province, where the U.S. and NGOs have accused the Chinese government of forced labour and human rights abuses. Beijing denies any abuses.
Shein has previously said it requires contract manufacturers to only source cotton from approved regions, and that it has a zero-tolerance policy for forced labour.
But publicly distancing itself from Xinjiang cotton is risky, as retailers that have done so in the past faced criticism and boycotts from Chinese consumers, and pushback from Chinese authorities.
Most recently, Japan's Uniqlo was slammed on Chinese social media after a November BBC interview in which Chief Executive Tadashi Yanai said the retailer is not using cotton from the region.
In a hearing after Shein's session on Tuesday, Independent (LON:IOG) Anti-Slavery Commissioner Eleanor Lyons told lawmakers: "I don't think they [Shein] are being transparent about what is going on in their supply chains, I would want to hear more from them and understand that they are truly looking into the potential human rights violations within them."
Shein, which sells 2.99-pound ($3.75) dresses and jeans for as little as six pounds on its UK site, has grown rapidly and was valued at $66 billion in a fundraising in 2023.
Shein has not disclosed any results at a group level, but its British business made 1.55 billion pounds ($2 billion) in revenue in 2023, filings showed last year.
In contrast with Zhu, Temu's senior legal counsel Stephen Heary said the online retailer, part of Chinese ecommerce giant PDD Holdings, does not permit sellers from the Xinjiang region to sell on its platform.