The USCC report primarily focused on Shein, the popular fast fashion platform founded in China and now headquartered in Singapore
Temu saw a 45 per cent surge in downloads and 20 per cent growth in its daily active user base after it ran ads during the Super Bowl in February
By Coco Feng in Bejing
April 15, 2023
A customer holds a Shein bag outside its Tokyo showroom, Nov. 13, 2022. Photo: Bloomberg
Chinese-backed digital platforms Shein and Temu have become the latest targets of the US government, after an official report raised concerns over their data risks and other business practices.
The US-China Economic and Security Review Commission (USCC), created by Congress in 2000, published a report on Friday that accused the two popular apps and other similar Chinese platforms of possible data risks, sourcing violations and intellectual property infringements.
It represents the latest political backlash against Chinese businesses after short video app TikTok, owned by Beijing-based ByteDance, was banned on US federal devices over data concerns. On Friday, Montana became the first US state to pass a bill that makes it illegal to download the app in the state.
The USCC report primarily focused on Shein, the popular fast fashion platform founded in China and now headquartered in Singapore. Shein’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”, the report said.
Shein “has struggled to protect user data”, it added, referring to a US$1.9 million fine New York State imposed on its parent Zoetop last year for mishandling credit card and other personal information.
In addition, Shein also sourced clothing from China’s Xinjiang region but failed to prove it was not a product of forced labour, a requirement under the Uygur Forced Labor Prevention Act, the report said, citing an investigation by Bloomberg News in November.
The report also touched on other issues, including copying other brands’ designs and causing environmental impact.
“Shein takes visibility across our supply chain seriously,” said a company representative, adding that the firm has been providing service and goods “with full respect for the communities [it] serves” for over a decade.
Temu, the online shopping site owned by PDD Holdings, operator of the popular Pinduoduo e-commerce platform in China, was also singled out by the USCC.
“Like Shein, Temu’s success raises flags about its business practices,” the report said. “Temu’s lack of affiliation with established brands has brought concerns of product quality as well as accusations of copyright infringement.”
The Temu app seen on a smartphone in this arranged photograph taken in Hong Kong, Nov. 3, 2022. Photo: Bloomberg
Separately, its sister app Pinduoduo was suspended by Google Play last month following complaints about the presence of malware to bypass user security permissions and access private messages, according to the report.
Neither Temu nor PDD Holdings immediately responded to a request for comment.
Shein and Temu are the latest Chinese-backed success stories in the US. Shein accounted for 50 per cent of all fast fashion sales in the country as of November, ahead of established brands like H&M at 16 per cent and Zara with 13 per cent, according to market researcher Bloomberg Second Measure.
Temu saw a 45 per cent surge in downloads and 20 per cent growth in its daily active user base on the day it ran ads during the Super Bowl in February, according to Sensor Tower data.