US Congress Targets China’s Shein, Temu In Latest Backlash

A US government advisory group has targeted Chinese fast-fashion apps Shein and Temu over data security concerns, making them the latest US regulatory targets after social media platform TikTok.

The US-China Economic and Security Review Commission (USCC), created by Congress in 2000, in a report on Friday singled out the two popular apps and said they and similar Chinese platforms could be guilty of data risks, product sourcing violations and infringement of intellectual property.

TikTok, another Chinese-owned app massively popular in the US, has been banned on US federal government devices – as well as by the UK government and the European Commission – while the Montana on Friday became the first US state to pass a bill that would make downloads of the app illegal.

The USCC report singled out Shein for criticism, noting the 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”.

User data

The report said Shein has “struggled to protect user data”, referring to a $1.9 million (£1.5m) levied by New York State on parent Zoetop last year for mishandling credit card and other personal information.

The USCC also cited a Bloomberg investigation from November that found Shein had sourced clothing from China’s Xinjiang region but had failed to prove it was not a product of forced labour, as it is required to do under the Uygur Forced Labor Prevention Act.

It accused Shein of copying other brands’ designs and causing an adverse environmental impact.

Shein said it “takes visibility across our supply chain seriously” and has been providing goods and services “lawfully with full respect for the communities [it] serves” for more than a decade.

Business practices

The USCC also criticised Temu, owned by China’s PDD Holdings, which operates the popular Pinduoduo e-commerce platform in China.

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

It noted that the Pinduoduo sister app was suspended by Google Play last month after complaints it used malware to bypass user security permissions and access private messages.

Shein accounted for 50 percent of all fast-fashion sales in the US as of November, well ahead of brands such as H&M with 16 percent and Zara with 13 percent, according to Bloomberg Second Measure.

Competitor Temu has topped US app download rankings since January, with a 45 percent surge in  downloads and 20 percent growth in its daily active user base on the day it ran Super Bowl ads in February, according to Sensor Tower.

Data analysis

While Shein was founded in China it is now headquartered in Singapore, but both it and Temu primarily source their products from China and ship directly from there to US consumers.

For Shein in particular artificial intelligence-powered analysis of vast amounts of user data play a “critical role” in its success, Sheng Lu, a professor of fashion and apparel studies at the University of Delaware.

He told Agence France-Presse that Shein uses data collected from its own apps and other social media channels to “gain insights into consumers’ shopping habits and lifestyles, enabling the company to offer in-demand items”.

China-linked apps currently hold a number of spots in SensorTower’s top download rankings, with video editor CapCut – owned by TikTok parent ByteDance – at No 2., TikTok at No. 7 and Shein at No. 8.