Shein was accused of copyright infringement and unfair labor practices

Shein which holds the largest market share in the US fast-fashion industry faces increased scrutiny from Washington, after a sprawling report by a Congressional committee investigating China detailed allegations of copyright infringement and unfair labor practices.

A report published by the US-China Economic and Security Review Commission (USCC) accuses Shein of allegedly sourcing cotton from Xinjiang, a violation of the Uyghur Forced Labor Prevention Act. This follows a letter to the US Securities and Exchange Commission (SEC) by a bipartisan group of Congressional lawmakers demanding increased scrutiny of Shein’s business practices.

According to the letter, there are credible allegations of the company’s use of underpaid and forced labor in the Xinjiang Uyghur Autonomous Region. It asked the SEC to independently verify that Shein doesn’t use forced labor before allowing it to launch an IPO in the US.

The USCC report is more comprehensive as it cited numerous lawsuits against the company for blatantly copying high-fashion designs with low-priced materials, as well as alleging that it dodges US tariff and customs inspections to keep the price of its products low.

Not only Shein the USCC also expresses similar concerns about the business practices of Temu, a Shein competitor that lets American consumers buy products directly from Chinese warehouses. Temu has surged in popularity this year, becoming the most popular download in the iOS app store for four months last fall.

Shein was founded in China but is based in Singapore. It has since long been dodging accusations of unfair labor practices for years. In 2022 the app of the retailer giant was downloaded 200 million times. Shein’s valuation ahead of a potential IPO this year is $64 billion. That figure is down from a whopping $100 billion valuation in April 2022. Around 2,000–10,000 styles were added to Shein’s app each day between July and December 2021, according to a report by the nonprofit publication Rest of World.

Styles advertised on Shein’s website at any given time numbered 6000000. The fashion brand produces 6.3 million tons of carbon dioxide produced each year by the company’s consumption of oil and use of virgin polyester, equal to the emissions from 180 coal-fired power plants.