As the US grows wary of China’s growing influence on the Western tech scene, internet platforms from TikTok to Shein are finding themselves in Washington’s crosshairs.
As a Chinese saying goes: the first bird that rears its head is shot. In recent months, US lawmakers have intensified efforts to ban TikTok. In December, the US House of Representatives tidy his staff and legislators to remove the government-issued video app from his mobile. It looks like a broader restriction is coming after the app’s CEO, Shou Zi Chew, went through five hours of grilling questions before Congress in late March.
Now Temu and Shein, two fast-growing e-commerce platforms that take advantage of China’s efficient supply chains to ship affordable products to American consumers, face increased scrutiny from Washington.
The United States-China Economic and Security Review Commission (USCC), a governmental body created by Congress to report on the national security implications of the bilateral trade and economic relationship between the two countries, published a report detailing the “challenges” presented by Chinese fast fashion platforms.
Those challenges include “the exploitation of trade loopholes; concerns about production processes, supply relationships, product safety, and the use of forced labor; and violations of intellectual property rights.
The report, which was released last Friday, singles out Shein and Temu as two prominent examples of posing such risks to the United States.
These concerns have been noted before. For example, Rick Helfenbein, former Chairman of the Board of the American Apparel and Footwear Association, wrote in 2021 that Shein and other similar direct-to-consumer e-commerce players managed to take advantage of the US de minimis import exemption, which allows $800 per person per day to be duty-free.
But as Shein and Temu gain traction in the US, their influence inevitably draws more attention. Shein was the most downloaded shopping app in the US last year, surpassing Amazon; Temu, which is the sister app of Chinese online deal giant Pinduoduo, administered climb to the top of the US app stores in the course of a few weeks.
Shein responded to the USCC report in a statement: “As a global company with customers and operations around the world, Shein takes the visibility of our supply chain very seriously. For more than a decade, we have been providing customers with affordable, on-demand fashion, beauty and lifestyle products, legally and with full respect for the communities we serve.”
Temu did not immediately respond to a request for comment.
The fact that Shein is in the USCC’s crosshairs demonstrates the difficulty of trying to downplay one’s ties to China. In an effort to avoid the impact of geopolitical tensions, Chinese companies expanding in the West are feeling increasing pressure to disassociate themselves from their homes. Many Chinese startups have expressed to TechCrunch their angst about being caught up in geopolitics as they try to build a genuinely competitive global product.
like me wrote Before, many of them are now moving their parent entity offshore and even securing foreign citizenship for their executives, in addition to basic practices like storing user data in target markets instead of China.
In the case of Shein, the fast fashion giant, which was founded in Nanjing and Guangzhou a decade ago, has made Singapore the home of its factor holding company; its founder and CEO Sky Xu as well reportedly he became a permanent resident of Singapore, a country considered politically neutral and favored as an overseas outpost by Chinese tech bosses for its cultural and geographic proximity.