Shein uncovers child labour in its supply chain

Fast fashion giant Shein has admitted it found two cases of child labour in its supply chain last year in a revelation that will likely fuel concerns in the City ahead of potential  blockbuster float on the London Stock Exchange.

In a report published yesterday, the China-founded retailer said it had stepped up its auditing of suppliers through 2023 and uncovered two instances of children under 16 being put to work in the manufacturing of its low-cost clothing.

However, while the firm suspended orders from the suppliers and said the cases were “resolved swiftly”, it is still working with the companies in question.

“Both cases were resolved swiftly, with remediation steps including terminating contracts with underage employees, ensuring the payment of any outstanding wages, arranging medical checkups and facilitating repatriation to parents/legal guardians as needed,” Shein said. 

“Shein also ensured the contract manufacturers strengthened their processes for screening new hires, such as checking and maintaining records of all employees’ IDs. Following appropriate remediation, the contract manufacturers were permitted to resume business.”

The revelations will likely add to the headache facing lawmakers and regulators in London after months of criticism over Shein’s plans to float in the capital.

After initially tabling plans to list in New York, Shein came under intense pressure from Washington over its labour practices and fears over its ties to China. The company then ditched the proposals and swapped its intended listing venue to London.

The firm has reportedly confidentially filed papers for an IPO on the London Stock Exchange which could take place as soon as this year.

However, the move has incensed some in the capital who say welcoming the firm would water down governance standards on London’s markets.

“With Shein’s prices so low the London Stock Exchange needs to ask itself, whose suffering is subsiding those prices?,” Alicia Kearns, the former Tory chair of the Foreign Affairs Select Committee and vocal anti-China campaigner, told City A.M. earlier this year.

A report from the advocacy group Public Eye in 2021 first sounded the alarm on conditions in its supply chain after finding that workers at six Shein suppliers were subject to punishing 75 hour weeks in factories with blocked corridors and stairways.

In response Shein said it has built an in-house team to monitor supply-chain partners. 

The now-Singapore headquartered firm has been on an offensive to try and assuage concerns over in recent months. Last October, the company tightened its supplier policy after the child labour cases were found, so that any severe breaches – called “Immediate Termination Violations” – would result in ending the relationship with the supplier immediately.

Prior to coming into government, the Labour party suggested it would back the Shein’s plans to float in London, with a spokesperson saying it expected “the highest regulatory standards and business practices” from businesses operating in the UK. 

“We believe the best way to ensure this is to have more companies operating from and regulated by UK law,” a spokesperson for the party said.

The business secretary Johnathan Reynolds has also met with Shein executives.