U.S. Investigates Whether 'China's Uniqlo' SHEIN Violated Consumer Protection Rules, Clouding IPO Prospects

[Financial News] The U.S. Federal Trade Commission (FTC) is investigating Chinese fast-fashion e-commerce company SHEIN.
According to British media reports on the 28th local time, an FTC spokesperson said the agency is investigating SHEIN over consumer protection issues. Earlier, SHEIN disclosed in a filing released by the Hong Kong Stock Exchange on the 26th that it was cooperating with an FTC investigation and that the probe was related to its business operations in the United States, confirming the matter for U.S. authorities as well, ahead of its planned Hong Kong initial public offering (IPO).
SHEIN explained that "regardless of whether the investigation is resolved through a settlement, the company may still have to make substantial monetary payments, which could have a significant adverse impact on its financial condition and operating results."
Often called "China's Uniqlo," SHEIN was founded in 2012 and grew into one of the world's largest fashion brands by pursuing a low-price strategy with items such as "$10 jeans." After moving its headquarters from China to Singapore in 2021, the company was valued at $100 billion, or about 145.35 trillion won, when it raised investment funds in 2022.
SHEIN later pursued listings on the New York Stock Exchange (NYSE) and the London Stock Exchange, but shifted its focus to a Hong Kong listing as disclosure of "supply chain risks" emerged as a major obstacle. A source familiar with the matter said, "Chinese regulators could not accept disclosures that cited forced labor involving Uyghurs as a supply chain risk factor."
Over the years, the international community, including the United States, has raised concerns that SHEIN has maintained unethical labor practices and sold consumer products whose safety has not been verified.
[email protected] Hong Chaewan Reporter