The Scoop
U.S. lawmakers are probing Adidas, Nike, and Chinese-owned platforms Shein and Temu for possible links to China’s western Xinjiang region, where Chinese Communist Party officials have been accused of abusing the rights of Uyghurs and other Muslim minorities.
The prominent new U.S. House Select Committee on China sent letters to all four companies Tuesday, asking them to answer questions about whether forced labor in Xinjiang has permeated their supply chains, citing expert testimony. In the case of the two Chinese-owned shopping platforms, Congress also wants to know how they may be benefitting from lax tariff rules.
The queries in the letter partly focused on ways the companies confirm where materials and products are sourced. “What audit methods does Nike use to verify that suppliers in China — in and outside of Xinjiang — are not exploiting Uyghurs through state-sponsored labor transfers,” reads one question.
The firms were given until May 16 to respond.
“Shein has no suppliers in the Xinjiang Region. Our suppliers are based in regions including Brazil, Southern China and Turkey,” a spokesperson for Shein said in a statement. “We take visibility across our entire supply chain seriously, and we are committed to respecting human rights and adhering to local laws in each market we operate in.”
Temu, Nike, and Adidas did not immediately return a request for comment.
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Louise’s view
Chinese companies are going out of their way to obscure their connection to the People’s Republic. One of the most recent examples is Temu, the most downloaded U.S. service in Apple’s app store as of mid-April, according to Apptopia. Temu’s website removed references to its Chinese parent, PDD Holdings, and said it was founded in Boston.
But so far, the efforts to distance themselves from China haven’t worked, and now, their biggest strengths — linking overseas consumers to Chinese sellers — are coming back to haunt them. And to Washington, it doesn’t matter that Amazon and eBay also benefit from lax tariff rules in the same way that Shein and Temu do.
Still, despite all the D.C. hype around Shein and Temu’s Chinese ties, American consumers have remained loyal. If that continues, they can keep growing in the U.S.
Room for Disagreement
There is a risk consumers could grow wary of the Chinese background of the shopping platforms. Users in Asia recently became distrustful of Bondee, a metaverse app that makes cute avatars, after discovering it had ties to a similar platform launched in China.
Earlier this year, its popularity was soaring in the Philippines, Taiwan, Malaysia and elsewhere. But then it slumped after reports surfaced that Bondee seemed like a copycat of Chinese app Zheli. Bloomberg reported that both are tied to Metadream, which is incorporated in Singapore but most of its employees are based in China.
Notable
- Chinese companies have been under pressure in other ways. Some U.S. lawmakers on Monday asked the Securities and Exchange Commission to halt a potential initial public offering by Shein until the agency can confirm the shopping platform doesn’t use forced Uyghur labor, Reuters reported.