“You’re Next!” US Congress Tells Chinese-Owned Shein and Temu

The US Congress Has Its Sights On Shein and Temu After TikTok

There have been growing concerns in the United States about the threat China-owned companies pose to the national security of the company. These concerns have escalated in recent months ultimately culminating in a congressional hearing for TikTok’s CEO Shou Zi Chew. The hearing was followed by the state of Montana passing a bill to ban the app.

However, it seems that this is only the beginning, and Chinese-owned companies which are thriving in the country are drawing the attention of lawmakers in the country. The United States-China Economic and Security Review Commission (informally, the US-China Commission, USCC) in a recent report, accuses Shein and Temu of possible data risks posed to the US. The report cites violations of data privacy laws, trade loopholes, and infringements of intellectual property law.

The report is titled, “Shein, Temu, and Chinese e-Commerce: Data Risks, Sourcing Violations, and Trade Loopholes.” As TechHQ claims, the report by the USCC, like many before it, follows the years-old logic that anything and everything from China is hazardous.

The report details the challenges posed by both of these Chinese “fast-fashion” platforms. The report states, “These platforms primarily rely on US consumers downloading and using Chinese apps to curate and deliver products. The primary focus of this Issue Brief is first mover Shein, about which the most data are available, with additional discussion of Temu, which has rapidly expanded its US market presence in the past year.”

See also

Tech & Science

China’s President Xi Jinping Predicts ‘Dangerous Storms’ Due To AI

Issues With Shein

Shein is an international fast-fashion e-commerce company that sells affordable clothing and accessories for women, men, and children. The company is based in China and was founded in 2008 by Chris Xu.

Shein has quickly grown in popularity, particularly among young people, due to its affordable prices and a broad range of styles. Downloaded over 200 million times in 2022 (globally), Shein was the most downloaded shopping app of the year. As of 2022, Shein had an estimated 74.7 million active shoppers with 13.7 million of them based in the US.

In the report, the USCC singled out Shein noting that the platform’s app “requests that users share their data and activity from other apps, including social media, in exchange for discounts and special deals on Shein products”.

Sheng Lu, a professor of fashion and apparel studies at the University of Delaware spoke to Agence France-Presse, a French news agency on the issue. He said that Shein uses AI to analyze user data collected from their apps and other social media channels to “gain insights into consumers’ shopping habits and lifestyles, enabling the company to offer in-demand items”.

The USCC also cited a Bloomberg investigation from November 2022 that found Shein had sourced clothing from China’s Xinjiang region and failed to prove that the clothes were not products of forced labor as per the Uygur Forced Labor Prevention Act.

In the report, the USCC also accused Shein of copying other brands’ designs, causing an adverse environmental impact, and also said the company “struggled to protect user data.”

The report referred to a US$1.9 million punishment New York State imposed on Shein’s parent company Zoetop last year for improper handling of credit card and other personal information when it said that Shein “struggled to protect user data”.

Issues With Temu

Temu is an online-shopping megastore that offers all kinds of products. The Chinese-owned digital marketplace is a globalized version of Pinduoduo, a Chinese e-commerce company. Both companies are owned by China’s PDD Holdings.

The app launched in late 2022 and has quickly risen to the top. According to the New York Post, over 50 million Americans have downloaded Temu since it launched state-side in September 2022.

On Temu, the report said, “Like Shein, Temu’s success raises flags about its business practices. Temu’s lack of affiliation with established brands has brought concerns of product quality as well as accusations of copyright infringement.”

Silicon notes that Pinduoduo, Temu’s sister app, was suspended in March by Google Play after several complaints that it used malware to get past user security and access private information.

Shein has since responded to the USCC report but Temu remains silent on the matter. In a statement, Shein said, “As a global company with customers and operations around the world, Shein takes visibility across our supply chain seriously. For over a decade, we have been providing customers with on-demand and affordable fashion, beauty, and lifestyle products, lawfully and with full respect for the communities we serve.”