Business and Trade Committee 

Oral evidence: Make Work Pay: Employment Rights Bill, HC 370

Tuesday 7 January 2025

Ordered by the House of Commons to be published on 7 January 2025.

Watch the meeting 

Members present: Liam Byrne (Chair); Antonia Bance; John Cooper; Sonia Kumar; Charlie Maynard; Mr Joshua Reynolds; Matt Western; Rosie Wrighting.

Questions 224 to 298

Witnesses

II: Yinan Zhu, EMEA General Counsel at SHEIN; Stephen Heary, Senior Legal Counsel at Temu; and Leonard Klenner, Senior Compliance Manager at Temu.

Examination of Witnesses

Witnesses: Yinan Zhu, Stephen Heary and Leonard Klenner.

Q224       Chair: Welcome to the second panel of our first session of 2025 looking at the Employment Rights Bill and industrial relations in the UK. We are very grateful to you for joining us from SHEIN and from Temu this afternoon to give us evidence. Ms Zhu, perhaps I could just start the questioning with your good self. Could you just tell us, do you source cotton from China?

Yinan Zhu: SHEIN is a company originated and developed in China leveraging the Chinese supply chain. We have since grown into a global business with presence in over 150 countries.

Q225       Chair: But do you source cotton from China today?

Yinan Zhu: We do not obviously own any manufacturing facilities. We work with a wide network of suppliers. We have manufacturers in China, in Brazil, in Turkey. We are obviously looking at the other potential supply chain locations as well.

Q226       Chair: In the products that you ship, there is cotton from China?

Yinan Zhu: As I mentioned, the suppliers we work with are based in China, in Turkey and Brazil. Obviously, many of them are in China.

Q227       Chair: Okay. This is not a trick question. It is not a complicated question. In the products that you ship, will there be cotton from China?

Yinan Zhu: Most of the suppliers we work with are based in regions—

Q228       Chair: It is a yes or no question, actually. Do you think that there is cotton from China in the products that you ship? Yes, or no?

Yinan Zhu: My understanding, and also, Chair, with all due respect, while I understand that today is discussion is about international supply chains and upholding the labour rights and standards, I can only answer questions as far as my position and responsibility relates to.

I will do the best I can to answer your questions. To the extent that there are details that I am not able to provide, if you would allow me, we can provide a written response after the hearing.

Q229       Chair: All right. Okay. But the first question is, is there cotton from China in the goods that you sell?

Yinan Zhu: Chair, thank you again for your patience. With all due respect, may I please ask for permission to be able to write to you about the further questions you may have?

Q230       Chair: You cannot tell the Committee today whether there is cotton from China in the products that SHEIN sells?

Yinan Zhu: What I am able to share with the Committee is that obviously we comply with laws and regulations everywhere we do business in the world.

Chair: That is good.

Yinan Zhu: We have supplier codes of conduct, we have robust systems, procedures and policies in place, and we also have very strong enforcement measures in place to ensure that we adhere to the high standards that are expected in our supply chain. We take these—

Q231       Chair: But you cannot tell the Committee today whether there is cotton from China in the products that you sell?

Yinan Zhu: As mentioned, Chair, with all due respect, for detailed operational information and in other aspects, I am not able to assist. I will have to write back to the Committee afterwards.

Q232       Chair: Are you able to tell us whether there is any cotton from Xinjiang in the products that you sell?

Yinan Zhu: Similarly, I believe that is a similar question to the previous one just asked so we are going to have to write to the Committee afterwards.

Q233       Chair: Okay. You cannot tell me definitively today whether the products that you sell contain any cotton from Xinjiang?

Yinan Zhu: Thank you again for your patience. I am going to apologise for having to repeat again: if you would allow me, we will write to the Committee afterwards.

Q234       Chair: Is it your company’s view that there is forced labour in Xinjiang in China?

Yinan Zhu: Again, back to the agenda of the Committee, as I understand it, we are looking at upholding—

Q235       Chair: The agenda for the Committee is that I set out what the agenda is and the question is: does your company fear that there is forced labour in Xinjiang?

Yinan Zhu: I am only able to answer the questions that relate to our business.

Q236       Chair: You cannot tell me whether SHEIN fears that there is forced labour in Xinjiang?

Yinan Zhu: As mentioned, I do not think it is our place to comment on just having a geopolitical debate. My responsibility here—

Q237       Chair: It is not a geopolitical debate; it is a question of fact.

Yinan Zhu: I am only able to answer questions as they relate to our business.

Q238       Chair: Okay. But if your business is sourcing product from Xinjiang, you ought to know whether there are risks of forced labour in your products.

Yinan Zhu: If you would allow me, I can explain a little bit about our business. Our business, obviously, is about—

Q239       Chair: We will get into that, don’t worry. Let me just follow that question up, though, to ask: do you think that there is a problem with due diligence in investigating human rights in Xinjiang?

Yinan Zhu: Again, if there is a specific question about our business and how we do supply chain due diligence, I am happy to explain here to the Committee how we carry out supply chain due diligence, if I may.

Chair: Okay. 

Yinan Zhu: We have a supplier code of conduct and responsible sourcing standards and all of these documents are publicly available on our website. The contract manufacturers that SHEIN works with are required to sign up to these standards and not only do they need to sign up, they need to fully understand the importance of the issue.

We run hundreds of training sessions every year with the suppliers and we have robust systems in place. We carried out close to 4,000 audits; 92% of them were carried out by third-party internationally verified agencies, such as GS, Intertek, Openview, Bureau Veritas. These audits are indeed intended to ensure the robustness of our supply chain and labour rights protection. When these audits are conducted, the agencies are particularly vigilant about forced labour and child labour issues and they work with a comprehensive checklist of over 140 items.

Q240       Chair: Does that checklist include any prohibitions on using cotton that is sourced in Xinjiang?

Yinan Zhu: I am happy to explain the due diligence process and the checklist. We have immediate termination violations and also immediate remediation violations.

Forced labour, child labour and ethical issues such as bribery or integrity issues such as trying to avoid audits, are all immediate termination violations while immediate remediation violations include, for example, preventing the workers from unionising or joining a union or having poor, unsafe working conditions or having significant, negative environmental impact, and so on.

Q241       Chair: However, you do not prohibit suppliers from sourcing cotton in Xinjiang? That is to say that of the 140 points on the checklist that you just referred to, none of them says, “You shall not buy cotton from Xinjiang”.

Yinan Zhu: As I was trying to describe, our policies and generally the position is that we comply with all laws and regulations in the countries that we do business in—

Chair: That is good.

Yinan Zhu: —as they are applicable to us. So the audits are obviously carried out in order to ensure that.

Q242       Chair: Again, maybe this is a simple yes or no, but, in your 140-point checklist, do you prohibit your suppliers from sourcing cotton in Xinjiang?

Yinan Zhu: Chair, as I do not directly work on the audit, while I understand your question and I understand the importance of the work of the Committee, I am going to have to ask for permission to write back to you on this.

Q243       Chair: In November 2023, Oritain found that just under 2% of SHEIN’s cotton tested positive for unapproved cotton. Can you tell us what the figure was for the last month for which you have data?

Yinan Zhu: Unfortunately, as I am not directly responsible for that area, I do not have that information.

Q244       Chair: If we write to you, can you supply that information?

Yinan Zhu: I am going to have to check internally whether the information is available.

Q245       Chair: You are seeking a listing and it is said that you may be seeking to list on the London Stock Exchange. Is that true?

Yinan Zhu: Again, I am not able to comment on any IPO speculation. It is not—

Q246       Chair: Why did you cease work on seeking a listing on the New York Stock Exchange?

Yinan Zhu: I am not able to comment on any IPO-related matter; it is not in my remit.

Q247       Chair: It was reported that SHEIN sought permission of the China Securities Regulatory Commission to list in the UK or the US. Why would you need Chinese Government permission to list in either America or Britain, if you are a company headquartered in Singapore?

Yinan Zhu: Sorry, Chair, I am not able to comment on that because I am not close to the details of the news report that you just mentioned.

Q248       Chair: So you cannot tell us anything about the listing, you cannot tell us anything about cotton in SHEIN products—you cannot tell us much, in fact.

Antonia Bance: The solicitors company, Leigh Day, is acting for Stop Uyghur Genocide and recently sent managers at SHEIN a dossier setting out likely forced labour abuses in the SHEIN supply chain in Xinjiang. Leigh Day sent the dossier in August 2024. I have read the dossier, the Committee have had the dossier, and it is appalling.

Under the UK’s Proceeds of Crime Act, it is an offence to profit from goods that, if produced in the UK, would break the Modern Slavery Act. I understand that the dossier was sent to you earlier this month, on 3 January, a hard copy and via email. Have you seen that letter and dossier from Leigh Day, and would you like to take the opportunity to respond to its contents?

Yinan Zhu: Thank you for the question. I have received the letter and the materials attached to the letter. We take these types of issues, the concerns raised, very seriously. We have reviewed them in full. While the content of the materials is about international supply chain risks in general and it is not specifically relating to the SHEIN business, we have obviously reviewed it. As I mentioned a little earlier, our key principle is that we comply with the laws and regulations in all the countries we operate in. As you kindly mentioned, because we operate in the UK, we indeed comply with the UK laws as well.

Q249       Antonia Bance: I understand that you are a solicitor, registered and regulated in England and Wales. Given that individuals can be prosecuted under the Proceeds of Crime Act, are you comfortable that no criminal liability attaches to you, yourself, now that you have seen the dossier?

Yinan Zhu: As mentioned, I have reviewed the documents and the materials that have been sent to us and we have experts who work in this area as well. We have reviewed the dossier in full. This is about international supply chain risks in general, not about SHEIN, specifically.

Q250       Antonia Bance: However, in November 2022, Bloomberg found the presence of cotton from Xinjiang in garments sold by SHEIN on two occasions. Are you still using cotton from Xinjiang?

Yinan Zhu: I answered a similar question from the Chair earlier. Our position, and the most important principle for us, is that we comply with the laws and regulations in the countries that we operate in.

Q251       Antonia Bance: Are you confident that you are in compliance with the UK Modern Slavery Act?

Yinan Zhu: Our position is that we are compliant with all relevant UK laws.

Q252       Rosie Wrighting: I have a couple of questions to help me understand the level of visibility of your supply chains. Do you have factories in China?

Yinan Zhu: So, yes, perhaps if it is helpful, I will just—

Q253       Rosie Wrighting: Or suppliers?

Yinan Zhu: Yes, I will take a step back. SHEIN is not vertically integrated. We do not own any factories or manufacturing facilities, but, yes, we work within a large network of suppliers.

Q254       Rosie Wrighting: I am aware of that, but does SHEIN have suppliers that make SHEIN clothing in China?

Yinan Zhu: Yes.

Q255       Rosie Wrighting: Do you know what regions in China?

Yinan Zhu: As I mentioned earlier, obviously, we leverage the Chinese supply chain as a country; we have very significant operations—

Q256       Rosie Wrighting: Do you know what regions you leverage?

Yinan Zhu: Our contract manufacturers are generally concentrated in the regions where the country as a whole has more capability in the fashion manufacturing sector. That includes—

Q257       Rosie Wrighting: Do you know what regions they are?

Yinan Zhu: That would include South China, for example, Guangdong province, East China, Zhejiang province, North China, Nanjing province, Central China, Hunan province and so on. There—

Q258       Charlie Maynard: What about West China? You have mentioned every other point.

Yinan Zhu: In West China, I think it is Guizhou province, for example.

Q259       Charlie Maynard: Guizhou is in West China? Isn’t it in South West China?

Chair: We will come to you in a moment. Ms Wrighting has the floor.

Charlie Maynard: Sorry.

Yinan Zhu: Similarly, because I personally have visited some of the suppliers, I am able to share these based on the information I have but I think perhaps to avoid giving Committee incorrect information or incomplete information, if you would allow me, I can write the Committee afterwards.

Rosie Wrighting: Yes, we would definitely like you to write to us. I am trying to understand how you can lay out the regions that you are using in China, but you are unable to lay out if any cotton is being manufactured in China for your SHEIN products. It is not adding up.

Chair: Mr Maynard, did you want to come in on that point?

Charlie Maynard: Yes. Frankly, I do not think you are respecting the Committee at all. On your website I can see about 20 products that are all cotton, which I just searched under “cotton”, and yet you say to our Chair that you cannot state whether SHEIN is selling any products that are made in China that are made of cotton. I find that completely ridiculous and I find it very unhelpful and disrespectful that you are here doing this. You mention every other spot of the compass, but you do not mention West China apart, from I think it was, Guizhou which is in South West China. You do not mention Xinjiang at all and it is wilful ignorance and—

Chair: Come to a question.

Q260       Charlie Maynard: I am asking you whether you think you are being disrespectful by being so blanketly void of answers.

Yinan Zhu: Thank you for your question and with due respect, I am doing the best I can to answer the questions the Committee—

Charlie Maynard: I am interrupting, but I disagree that you are doing the best you can. You are not. You are not giving us straight answers.

Yinan Zhu: I am giving the answers to the best of my ability and I have—

Q261       Charlie Maynard: Ms Zhu, that is not true. That is simply not true. We have asked you some very, very, very simple questions and you are not giving us straight answers. That, I find, dismisses the point of why we are here today. Do you understand how simple are the questions we are asking you? Do any of your products have cotton from China? That is not difficult.

Yinan Zhu: I understand the question and I believe that in answer to earlier questions I have answered to the best of my ability and offered on the questions I am unable to answer today, that I will write—

Charlie Maynard: I will park it. I will say that you have not answered to the best of your ability and that you have obfuscated wilfully.

Q262       Matt Western: Ms Zhu, I am interested in the point about audit that my colleague was asking. Like any brand, you will want to ensure that there is good quality product coming out with the label SHEIN on it. Does the company visit the contracted factories that make SHEIN clothing? Yes, or no?

Yinan Zhu: The external auditors we engage, they do visit—

Q263       Matt Western: The employees of SHEIN?

Yinan Zhu: They are not employees of SHEIN. Of course, there are SHEIN employees who visit the factories, but we do not want to just mark our own homework. We engage verified external auditors to do the onsite audits.

Q264       Matt Western: As part of that quality audit, would your auditors ask about the source of the materials that they are using to ensure the consistency of the product output?

Yinan Zhu: My understanding, as I mentioned, is that there is this over 140-item checklist. The auditors will follow the checklist and issue reports accordingly. As perhaps mentioned earlier, the—if we need more details on the audits and items they check in the audits, that is a level of information that we will have to provide afterwards.

Q265       John Cooper: A question for both Temu and SHEIN. First of all, do you both stand by your 2024 modern slavery statements?

Yinan Zhu: I think the modern slavery statements we issued in 2024 were in relation to 2023, yes.

Q266       John Cooper: You are both happy to stand by those; yes? A question for Temu, specifically, then.

That 2024 modern slavery statement states that you conduct comprehensive risk assessment to your supply chains, “to identify and mitigate potential risks of modern slavery”. What do those risk assessments involve and why are they not published?

Stephen Heary: First if for a brief moment we could just provide some background on the business model of Temu, that would help to put this question in context. Thank you very much to the Committee for giving us the opportunity to speak here today.

Temu is a marketplace that connects third party sellers with consumers to provide them with high-quality goods at affordable prices. The sellers on our platform offer over 200 different product categories and apparel is one of those categories. To give you an example, fewer than 1% of the products sold on our platform to UK users, for example, contain cotton. Thirdly, we are strongly—

Chair: Just a minute; say that again.

Stephen Heary: Less than 1% of the products sold on our platform to UK users contain cotton. That is by way of example.

Thirdly, we are strongly committed to the UK market. We see the UK market as a market in which we can grow. The sellers who operate on our platform can prosper and they can do business.

By the end of 2025, for example, we are committed to having at least 50% of the sellers who sell on our platform physically based and registered in the UK. We see that as an achievable goal and a goal that we are working strenuously towards.

Q267       John Cooper: So back to my original question about risk assessment. What risk assessments do you undertake? What do you do? Do you go to these suppliers? Do you look at these things? How do you make sure that you are compliant with that modern slavery statement? What do you do? How do you achieve that?

Leonard Klenner: Perhaps I could use this opportunity to walk the Committee through the compliance programme that we have in place today. Compliance is an integral part of how we operate at Temu. The compliance programme that we have in place rests on two pillars, policies and processes. The Modern Slavery Act statement that you referenced is one such policy. We have other policies. We have implemented a human rights policy that is oriented around internationally recognised standards, such as the United Nations Guiding Principles on Business and Human Rights.

We also have a third-party code of conduct that is a binding agreement between us and all the third parties, such as the traders that we do business with. That specifically sets out that these traders have to adhere to ethical labour practices and specifically prohibits forced labour. We put these policies into practice and complement them with a number of compliance processes. These processes take effect across different stages and work together to ensure the compliance of our platform.

The first stage is the onboarding stage. A trader who is seeking to do business on Temu has to pass through an onboarding process. As part of this process, we require from that trader detailed information about their business, such as business registration documents, identifying information about key representatives, financial information, information about the intended scope and nature of the activities on our platform.

We check this information through industry standard tools, such as the LexisNexis world compliance database which includes sanctions lists, lists on politically exposed persons and other similar lists. Only traders who pass through this process are then allowed to do business on our platform. Similarly, we have a process in place before a product can be listed, which that product needs to pass through. As part of this process, we require the trader to submit information about the product, including any compliance-related information such as applicable certificates and other requirements. Only when this information is provided in full is that product allowed to be sold on our platform.

Our compliance process does not stop there. We monitor our platform, both with regards to the traders and the product on an ongoing basis, using automated solutions to ensure ongoing compliance. We also invite consumers to dedicated reporting channels through which they can share with us concerns about traders or products on our platform. We review all such reports and take appropriate action on them.

I would also like to mention that we provide our traders with extensive training and education materials through a dedicated portal that allows them to further their compliance efforts.

This is the compliance programme that we have in place today. The different measures that I mention work together to ensure compliance on our platform. Especially as a young company—we launched in September 2022—we are fully cognisant and realistic about the complexities of global supply chains, which is an issue that applies across our industry.

We are committed to continuously improving our compliance programme and I would like to mention that we are, at the moment, undertaking an industry-leading initiative whereby we will require and make mandatory for all traders on our platform, to disclose the origin of manufacturing of their products and this information will be made available to consumers on our website. This, again, is an industry leading initiative that we are undertaking voluntarily and I hope this demonstrates our commitment to compliance and to ensuring a trustworthy and transparent shopping experience for consumers.

Q268       John Cooper: Thank you for all that. Your latter point, that would allow consumers to make decisions, but would not necessarily stop you from selling that item. You would simply offer that product and say it contains items from wherever. It is up to consumers then.

Leonard Klenner: I think it is important to say that the onboarding processes that I described, at which we check information from the traders against, for example, the world compliance database and the sanctions lists contained therein, apply to all traders.

The information that we are disclosing additionally on our website furthers consumer transparency but it does not change or affect the compliance checks that we have in place and that apply to all traders before they can even do business on our platform.

Q269       John Cooper: If I can just turn back to cotton, Mr Heary mentioned cotton there and it is a relatively small part of your business, you say, although you are a very large business. However, 1% of a very large business might involve quite a lot of cotton.

There was a report earlier this year from the US website, The Information, and it said that managers at factories that make apparel claim that Temu were encouraging them to continue to use cotton from China. Do you have a response to that allegation?

Stephen Heary: I cannot speak to the specific article that you mention. If you would like to share the details, I would be happy to look into it. However, I can say that we take any issues of labour practices and problematical labour very seriously. Forced labour, for example, is an issue that is a core priority for senior leadership all the way down and across the organisation as well. So, sorry, if you could repeat the—

Q270       John Cooper: It was a specific allegation that there was pressure from your company to continue using cotton from China. So, can you not address that specific example?

Stephen Heary: I cannot address the specific question. I am not familiar with the article that you mention.

Q271       Chair: So, as you understand it today, are there any retailers on your platform selling products from Xinjiang?

Stephen Heary: We strive to adhere to achieve compliance with laws in all of the markets in which we operate.

Chair: I would expect nothing less.

Stephen Heary: We have taken on board the feedback of stakeholders and consumers and we do not permit sellers from the Xinjiang region to sell products on Temu.

Q272       Sonia Kumar: Going back to SHEIN, you said that you do site visits to your manufacturing sites. Is that correct?

Yinan Zhu: The auditors will do onsite audits.

Q273       Sonia Kumar: Have you done any visits?

Yinan Zhu: I have visited, yes.

Q274       Sonia Kumar: That is good. When you have gone to visit, what products have been in those manufacturing sites?

Yinan Zhu: Garments, clothing.

Q275       Sonia Kumar: Okay. So, can you tell me what type of clothing?

Yinan Zhu: Perhaps a variety of clothing because, depending on the size of facilities, there could be many things happening.

Q276       Sonia Kumar: Could you give me an example of something you have seen?

Yinan Zhu: Sure. I do not remember exactly—just a lot of clothing being manufactured.

Q277       Sonia Kumar: Okay. So you have seen some clothes being manufactured, but you cannot say whether it was cotton or not cotton or anything about the product itself?

Yinan Zhu: Yes, like I said, it is—I was only able to see clothing being manufactured and it could be different types.

Q278       Sonia Kumar: I will move on. In the latest sustainability and social impact report, you reported two cases of child labour in your supply chain. How confident are you that your supply chain is child-labour free?

Yinan Zhu: Thank you. It is a very, very important question and indeed, it is a very serious issue. I guess it is not just about those two suppliers; it is about preventing child labour in the supply chain in general. First, I think it is important to stress that not only do we work with the suppliers to prevent that and take remediation actions, but we have also tightened the policy.

Previously, the policy was that child labour was an immediate remediation violation, but now, since October 2023, child labour is one of the immediate termination violations. Not only that, but we have programmes in place to help educate the suppliers. There are training programmes, notifications are put out, but we also help suppliers to have more robust system internally to help to prevent that.

It is also worth highlighting that while the definition of child labour might differ in different countries, the laws might be different, the standard in our policy is 16 years old, which is higher than the International Labour Organisation standard.

Q279       Sonia Kumar: How many suppliers’ contracts have you terminated because of a suspicion or evidence of child labour in that supply chain?

Yinan Zhu: I am really sorry that because that is a quite granular level of detail, I do not have the specific information on how many suppliers have been terminated. I know, however, as mentioned, that it is immediate termination violation now. In saying that, we also have a responsible exit programme. That is, we do not just terminate the suppliers. We do an impact assessment. We look at how much SHEIN’s business is worth to that supplier, how many people they employ and we will help to ensure that there is a smooth transition if they are terminated.

Q280       Sonia Kumar: Can you provide the Committee with some evidence of places or people or companies that you have been working with that have not worked well and because of child labour. You said that you are collecting this data. Can you present that data to us?

Yinan Zhu: I can check because I believe I understand that the question is how many suppliers have we terminated for child labour issues. I can certainly check on the data. However, I think it is also important just to note that there is a robust system because it is not just about one or two suppliers. It is about systematically ensuring that this does not happen again.

Q281       Sonia Kumar: In the cases that you agree there have been, how long did child labour continue in that service?

Yinan Zhu: I will have to double-check on that level of detailed information. My understanding at least, is first that with underage labour—they were 15 years old and nine months or 11 months respectively—there was a mix-up with the ID paperwork or whatever; when it has been identified, within a few days an arrangement has been put in place to ensure all the remediation actions were taken.

Q282       Sonia Kumar: Would you be able to supply that to us?

Yinan Zhu: Yes

Q283       Sonia Kumar: You say it was for only a couple of days that child labour was taking place?

Yinan Zhu: I do not know how many days that they had been working in the factory. I do not have that granular level of detail, but I can certainly check. Sorry, a logistical question: would I be liaising with the Clerk afterwards about the follow ups?

Chair: Don’t worry. We know where to find you. We will write to you.

Q284       Rosie Wrighting: In answer to previous questions, you have both spoken about your suppliers or your retailers. How much detail do you know about your suppliers or retailers outsourcing to smaller suppliers and retailers? Do the audits that you conduct also audit these outsource factories? The question is for both of you, so whoever wants to start. Do you want to start for SHEIN?

Yinan Zhu: Okay. To start with, I do not think the suppliers generally systematically outsource and we do work with many small to medium-sized suppliers.

Q285       Rosie Wrighting: When you say they do not systematically outsource as a starting point, can you confirm what that means?

Yinan Zhu: To answer the question, because you were saying are we checking where they are outsourced to, my understanding is that there is limited outsourcing.

The second question was more about are they outsourcing to smaller businesses. To begin with, many of the suppliers are small to medium businesses. We have worked with them over the years to ensure that robust systems are in place and they are trained. Out of the close to 4,000 audits that have been conducted, over 600 audits are around upstream suppliers or packaging suppliers. There is a level of audit for the occasional contracts, as you mentioned, like outsourced equivalent.

Q286       Rosie Wrighting: To come back to the question, do you believe that your suppliers are outsourcing their manufacturing?

Yinan Zhu: As mentioned, I do not know to what extent there is outsourcing. My understanding is that generally when we contract with them, they are the ones that are producing the products that we order from them.

Q287       Rosie Wrighting: You could onboard and audit a factory but they could go on to use another factory and you would not know and you do not know.

Yinan Zhu: They have their upstream suppliers—for example, packaging or material and so on. What I was trying to say is that we audit some of those as well. I understand it is an industry-wide challenge of how far you go on the entire level of supply chain, how many levels removed. We require all the suppliers to comply with our supplier code of conduct but also whoever they buy things from.

I think it is worth taking a step back to say that supply chain due diligence is not a mandatory obligation in many countries at the moment. We try to meet a high international standard and we voluntarily carry out regular audits and this level of supply chain due diligence.

Q288       Mr Joshua Reynolds: SHEIN’s supplier code of conduct says that suppliers are told that they need to “arrange working hours responsibly”. What does that mean?

Yinan Zhu: Working hours, pay and so on are all part of the supplier code of conduct and it is very important for the suppliers to adhere to the legal requirements.

Q289       Mr Joshua Reynolds: Yes, but specifically what do you mean when you say “arrange working hours responsibly”? What does that mean?

Yinan Zhu: All the working hours need to comply with the laws and regulations where the suppliers are based and also workers need to be compensated and paid appropriately.

Q290       Mr Joshua Reynolds: How many hours a week do you think is an appropriate number for a shop-floor worker at a supplier for SHEIN?

Yinan Zhu: I don’t think it is for me to judge what is appropriate. We are saying—

Q291       Mr Joshua Reynolds: You are the general counsel for Europe, the Middle East and the whole of Africa, so it probably is appropriate, in your elevated senior position within the organisation, to make comment on what is an appropriate number. Would you say that 50 hours a week is appropriate?

Yinan Zhu: In different countries there are detailed provisions for different maximum hours, rest periods and so on. The laws vary in different countries and there are also International Labour Organisation standards. We require the suppliers to comply with our code of conduct and policies and also to ensure that they comply with the local laws as applicable.

Q292       Mr Joshua Reynolds: In 2022, a Channel 4 investigation found that a manufacturer being used by SHEIN in China had employees working 18-hour days with one day off a month. In May last year, a BBC report—a fresh report—found that some workers were still working 75 hours a week. Is that appropriate? Do you think those two specific instances agree with your supplier code of conduct?

Yinan Zhu: I do not recognise the specifics of what you have just described. As mentioned, the working hours, overtime and the rest are all set out as requirements for the suppliers to adhere to and it is definitely part of what is being audited. I believe there are suppliers that were terminated due to a combination of factors, including excessive overtime.

Q293       Mr Joshua Reynolds: You talk about suppliers being terminated and the words you used were “immediate termination violation” but your sustainability and social impact report says if one of your suppliers is caught paying below the minimum wage it “requires immediate improvement”. Surely paying below the minimum wage does not just require improvement; it requires immediate termination.

Yinan Zhu: I believe paying below the minimum wage is one of the immediate remediation violations—that is, they need to fix it within 30 days.

Q294       Mr Joshua Reynolds: I quote from your sustainability and social impact report that says “requires immediate improvement”. That is the wording.

Yinan Zhu: That is why it is one of the immediate remediation violations. If they don’t fix it within 30 days, they will be terminated.

Q295       Mr Joshua Reynolds: Would you not argue that breaking the law by paying less than the minimum wage does not just require fixing it but requires saying, “This is a business that we no longer want to work with” and so they should be terminated?

Yinan Zhu: First, all the suppliers need to comply with the laws and regulations as applicable to them and there will be consequences if they breach the law.

Q296       Mr Joshua Reynolds: Well, there aren’t though, are there? You said that you are happy that if one of your suppliers breaks the law by paying below the minimum wage you think that they just need to fix it. You don’t think that the appropriate sanction is to say, “You are not appropriate to work with us”. Do you think the correct message to give is that SHEIN does not think that breaking the law as a supplier requires you to not work with them any more? Is that appropriate?

Yinan Zhu: If they are breaking the law, there will be consequences associated with breaking the law. From an ESG standpoint—and it is a commonly accepted principle generally—because there is a severe impact on many people, as I mentioned a little earlier, there are some very serious matters where we have moved into immediate termination violations.

If the suppliers can remediate, because that is also about the impact on society in general for employment opportunities for the individuals who are employed by that employer, the suppliers will certainly be subject to very severe scrutiny. The higher-risk profile suppliers will be subject to stricter orders to ensure that it does not happen again.

Q297       Charlie Maynard: You have a rating from A to E for audit findings. Some of the things at the bottom end of that are dormitories inside factories, child labour and so on. Will you say a little bit about what you would like to see stamped out? What other practices are you looking to get rid of over the next one, two, three years that you are uncomfortable with in your bottom D and E categories?

Yinan Zhu: Thank you for your question. I will take a little bit of time to explain. The A, B, C, D, E is based on the scoring system that the auditor works with and there are different violations where different points are deducted. Other than the immediate remediation violations and immediate termination violations, the consequences are obviously different.

There is a very long list of requirements that suppliers need to meet and there are clear definitions and penalties set out in the policies. For example, as I mentioned, the immediate remediation violations include safety and the working environment or paying on time or excessive working hours or whether you are giving appropriate protection or tools or the condition of the factory. There are many factors, so there are different items that the suppliers need to comply with and they will be subject to different types of consequences or penalties depending on what the violation is.

Q298       Charlie Maynard: But there are no particular red lines as to things that, “Within X years we need to get rid of this, this, this and this” that you are focused on?

Yinan Zhu: Perhaps the way to look at this is that the most severe ones are the immediate termination violations—forced labour or child labour, ethical issues, integrity issues.

Chair: That has been an extremely helpful evidence session. I say to colleagues from Temu that there has been some reassurance about some of your supplier agreements.

But Ms Zhu, I have to say that for a company that sells £1 billion to UK consumers and is seeking to float on the London Stock Exchange, the Committee has been pretty horrified by the lack of evidence that you have provided today. You have given us almost zero confidence in the integrity of your supply chains. You cannot even tell us what your products are made from and you cannot tell us much about the conditions that workers have to work in. The reluctance to answer basic questions has, frankly, bordered on contempt of the Committee. I hope that we can bring some clarity to this matter as quickly as we can through follow-up correspondence, but for now that concludes this panel.