Congress highlights forced labor concerns with Chinese shopping sites Shein and Teemu

Congress highlights forced labor concerns with Chinese shopping sites Shein and Teemu

Lawmakers are flagging what they say are significant violations of US law by Teemu, a popular Chinese shopping platform, accusing it of providing an unregulated channel that allows goods made with forced labor to flow into the United States. Is.

one in Report released on ThursdayThe House Select Committee of the Chinese Communist Party said Teemu, 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 possibly shipping products. Made with forced labor in the United States on a “regular basis”.

The report stems from an ongoing investigation into forced labor in supply chains that touch China. Lawmakers said the report was based on responses submitted to the committee by Teemu, as well as fast fashion retailers Sheen, Nike and Adidas.

The report offered a particularly harsh assessment of TEMU, stating that “there is an extremely high risk that TEMU supply chains are contaminated by forced labor.” The site advertises itself under the tagline “Shop Like a Billionaire” and is now the second most downloaded app in the Apple Store.

The report also criticized Sheen’s use of an import method that allows companies to bring products into the United States duty-free and with little scrutiny from customs, as long as the packages are shipped directly to consumers. and cost less than $800. Some legislators are pushing for the closure of this shipping channel, which called de minimisFor companies sourcing goods from China.

Lawmakers said they are troubled by what the bipartisan committee’s investigation has revealed so far and that Congress should review import loopholes and strengthen forced labor laws.

“TEMU is doing nothing to keep its supply chains free of slave labor,” said Representative Mike Gallagher, a Wisconsin Republican who heads the committee. “At the same time, Teemu and Sheen are building empires around de minimis loopholes in our import rules: dodging import taxes and scrutinizing the millions of goods they sell to Americans.”

Referring to the Chinese Communist Party, Representative Raja Krishnamoorthi, an Illinois Democrat and co-author of the report, said, “The initial findings of this report relate to the need for full transparency by companies potentially profiting from CCP forced labor and strengthens.”

Teemu, which began operating in the United States in September, told the committee that it now brings millions of shipments to the United States annually through a network of more than 80,000 suppliers that sell directly from Chinese factories to American consumers. . The site sells clothing, temporary tattoos, modeling clay, electronics and other items direct to consumers at prices as low as $3 for a baby romper, $6 for sandals and $8 for a vacuum.

The report also includes new data showing that Teemu and Sheen use heavy de minimis ruleAbout 600,000 such packages are mailed daily in the United States.

The dropshipping method allows retailers to sell their goods to consumers at cheaper prices, as they are not subject to the duties, taxes, or government charges that apply to traditional retailers who typically ship goods overseas in bulk.

De minimis shipping requires little information to be disclosed about the products and companies involved in the transaction, making it difficult for U.S. customs officials to detect packages containing narcotics, counterfeits, and forced labor. It happens. The number of de minimis packages entering the United States more than tripled between 2016 and 2021, when it reached 720 million.

At an annualized rate, the shipments reported by Sheen and Teemu would represent more than 30 percent of de minimis shipments that arrived in the United States last year, and about half of those packages would come from China, the report said.

Both Sheen and Teemu have steadily taken market share from US brick-and-mortar retailers and won over younger consumers by investing in sophisticated e-commerce technology and offering hundreds of new products more than competitors. Among teens, Shein was the third most popular e-commerce site after Amazon and Nike. a piper sandler report This spring.

As their popularity has grown, so have the firms’ congressional investigations into their ties to China. Sheen was originally based in China but has moved its headquarters to Singapore. TEMU, which is based in Boston, is a subsidiary of PDD Holdings, which moved its headquarters From China to Ireland this year.

Lawmakers have been questioning its relationship with the Chinese government, as well as the ability of companies to scrutinize their supply chains to ensure they do not contain ingredients or products from Xinjiang. Last year, the US banned products from Xinjiang, which it said used forced labor in factories and mines in the region.

The Chinese government has cracked down on Uighurs and other ethnic minorities in Xinjiang, including the organized use of forced labor to pick cotton; work in mines; and electronics, polysilicon, and car parts. Because of this, the US government now assumes that all materials from the area are made with forced labor until proven otherwise.

Teemu and Sheen did not immediately comment on the report. Shein previously said it has zero tolerance for forced labor, does not source cotton from Xinjiang and fully complies with all US tax and trade laws.

Laboratory tests launched by Bloomberg News in November found that Some of Xin’s clothing was made from cotton from Xinjiang. Sheen did not dispute those findings, but said in a statement to Bloomberg that it took steps in all global markets to comply with local laws and hired another lab, Oritane, to test its ingredients.

The congressional report also criticized TEMU’s failure to set up a compliance or audit system that could independently verify that its vendors were not buying products from Xinjiang.

Teemu told the committee that it has a reporting system in place that consumers and vendors can use to file complaints, and that it has specified a “zero-tolerance policy” for its vendors’ use of forced, indentured or penal labor. asked to sign a code of conduct. , Temu’s code of conduct also They say The company reserves the right to inspect factories and warehouses to ensure compliance.

But the code does not mention Xinjiang or the US ban, and Teemu told the House committee that it did not ban vendors from selling products made in Xinjiang, the report said.

Teemu also argued that the use of direct shipping meant that the US consumer, not Teemu, would bear the ultimate responsibility for complying with the embargo on Xinjiang goods.

The report is quoted as saying, “Temu is not an importer of record with respect to goods shipped to the United States.”

Customs lawyers said it was not entirely clear which party would be liable for compliance with the US ban, but any company facilitating the import of goods from Xinjiang could face civil or criminal penalties.

The committee’s report also featured a key chain that was listed on TEMU’s website this month and labeled “Pendant with Xinjiang cotton”. The key chain itself is shaped like a cotton bud, and the report states that the Xinjiang label “could refer to the material, supplier, pattern, or origin of the product.”

The report added that Teemu’s “policy of not prohibiting the sale of products that clearly advertise their Xinjiang origin, even in the face of growing congressional and public scrutiny on related topics, raises serious questions”. Are.”

The New York Times was not able to verify that the product is made using Xinjiang cotton, which is prohibited under US law. The Times found a similar product listed for sale on a Chinese wholesale site, said to be manufactured in Henan province outside Xinjiang.

A Times review of information shared by TEMU sellers on Chinese social media sites also suggested that TEMU did not require sellers to provide detailed information on where their products were made or which companies manufactured them.

Sellers who shared tips online about Teemu’s product review process gave several reasons that Teemu usually rejected new listings: for example, if the price was too high, if the samples were inconsistent with the photos, or if the goods did not contain consumer warning labels. But no one mentioned concerns about links to Xinjiang or the US import ban.

Jordan Holman Contributed reporting from New York.

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