Congress highlights ‘serious’ concerns about forced labor at Chinese shopping sites
Lawmakers are flagging what they believe are likely significant violations of US law by Temu, a popular Chinese shopping platform, and accusing it of providing an uncontrolled conduit through which goods made with forced labor can flow into the United States.
In a report published Thursdaythe Chinese Communist Party’s House Select Committee said that Temu, a fast-growing site that sells electronics, makeup, toys and clothing, had failed to maintain “even the facade of a meaningful compliance program” for its supply chains, and likely ship products made with forced labor to the United States “regularly”.
The report stems from an ongoing investigation into forced labor in supply chains touching China. Lawmakers said the report was based on responses submitted to the committee by Temu, as well as fast fashion retailer Shein, Nike and Adidas.
The report offered a particularly damning assessment of Temu, saying there was an “extremely high risk that Temu’s supply chains are contaminated with forced labour”. The site advertises itself under the slogan “shop like a billionaire” and is now the second most downloaded app in the Apple Store.
Lawmakers also criticized Shein’s use of an import method that allows companies to bring products into the United States duty-free and with less customs scrutiny, as long as the packages are sent directly to consumers and are valued less than $800. Some legislators have pushed for this shipping channel to be closed, some is called de minimisfor companies shipping goods from China.
Lawmakers said they were troubled by what the bipartisan commission’s investigation had uncovered so far.
“Temu is doing almost nothing to keep its supply chains free of slave labor,” said Representative Mike Gallagher, a Wisconsin Republican who leads the committee. “Temu and Shein are simultaneously building empires around the de minimis loophole in our import regulations: dodging import taxes and evading scrutiny on the millions of goods they sell to Americans.”
Temu, which began operating in the United States last September, told the commission it now brings millions of shipments to the United States each year through a network of more than 80,000 suppliers who sell directly from Chinese factories to American consumers. The site sells clothing, temporary tattoos, modeling compound, electronics, and other items directly to consumers for low prices, such as $3 for a baby romper, $6 for sandals, and $8 for a vacuum cleaner.
The report also included new data showing that Temu and Shein make heavy use of it the de minimis rule. The shipping method allows retailers to sell their goods to consumers at lower prices as they are not subject to import duties, taxes or government fees, unlike traditional retailers who typically ship overseas goods in bulk.
De minimis shipping also requires much less information to be released about the products and companies involved in the transaction, making it more difficult for U.S. Customs officials to track packages containing narcotics, counterfeits, and forced-labour goods. The number of de minimis packages entering the United States has exploded in recent years, from 220 million in 2016 to 720 million in 2021.
Based on data submitted by the companies, the report said that Temu and Shein alone are likely responsible for nearly 600,000 packages shipped to the United States each day under the de minimis rule.
On an annual basis, those shipments would represent more than 30 percent of global de minimis shipments to the United States last year, and nearly half of such packages come from China, the report said.
Both Shein and Temu have been steadily gaining market share from US brick-and-mortar retailers and winning over younger consumers by investing in advanced e-commerce technology and offering hundreds of new products than competitors. According to teens, Shein was the third most popular e-commerce site behind Amazon and Nike a Piper Sandler report released this spring.
As their popularity has grown, so has the companies’ congressional scrutiny, given their ties to China. Shein was originally based in China, but has moved its headquarters to Singapore. Based in Boston, Temu is a subsidiary of PDD Holdings, which moved headquarters this year from China to Ireland.
Lawmakers have questioned their relationship with the Chinese government and the Communist Party, as well as the companies’ ability to monitor their supply chains to ensure they do not contain any materials or products sourced from Xinjiang. Last year, the US imposed a ban on products from Xinjiang, citing the use of forced labor in factories and mines in the region.
Shein has previously said it has no tolerance for forced labor, does not purchase cotton from Xinjiang and fully complies with all US tax and trade laws. An investigation by Bloomberg News last November discovered that according to lab tests, some Shein clothing was made from Xinjiang cotton. Shein did not dispute Bloomberg’s test results, but said in a statement to Bloomberg that it is taking steps in all global markets to comply with local laws, and that it had engaged another lab, Oritain, to test its materials.
The congressional report also criticized Temu’s failure to establish a compliance or audit system that could independently verify that its vendors do not source products from Xinjiang.
Temu told the commission it has a reporting system that consumers and vendors can use to make complaints, and that it asks its vendors to sign a code of conduct that specifies a “zero tolerance policy” for the use of forced, indentured or penal labor. But the code of conduct does not mention Xinjiang or the US ban, and Temu told the House committee that it does not prohibit sellers from selling products made in Xinjiang, the report said.
Temu also argued that the use of direct-to-consumer shipping meant that the US consumer, not Temu, would bear ultimate responsibility for enforcing the ban on Xinjiang goods.
“Temu is not the importer of record with respect to goods shipped to the United States,” the report said.
The commission’s report also depicted a keychain posted on Temu’s website this month labeled “Xinjiang cotton pendant.”
The keychain itself is shaped like a cotton button, and the report said the Xinjiang label “may refer to the materials, supplier, pattern or origin of the product.” It added that Temu’s “policy of not banning the sale of products that explicitly advertise their Xinjiang origin, even in the face of increasing congressional and public scrutiny over related issues, raises serious questions.”
The New York Times could not independently verify whether the product is made from Xinjiang cotton, which is prohibited by US law. Checks by The Times found an identical product for sale on a Chinese wholesale site, described as being manufactured in Henan province, outside of Xinjiang.
Jordan Holman reporting contributed.