Shein’s rapid expansion in the U.S. has attracted scrutiny from China hawks over the past year.
Senator Tom Cotton described new supply-chain tracking software from shopping site Shein as “potentially fraudulent” and likely to funnel data from U.S. firms to the Chinese government.
He described these concerns about the popular fast-fashion company in a letter yesterday to President Biden, an exclusive copy of which National Review has obtained.
“Your administration must ensure that data from U.S. companies is not harvested by the Chinese Communist Party (CCP) through the purchase of Shein software and technology,” he wrote.
“As a large fashion retailer, Shein has access to a vast array of customer and supply chain data. And as a Chinese company, Shein is subject to national security laws that requires compliance with any request from the CCP to access that data.”
After this article was first published, a spokesperson for Shein said, via an emailed statement, that the company “has robust data security policies and practices in line with industry standards and limits data collection to technical information regarding design and manufacturing, as well as information needed to fulfill customer orders.” The statement said that Shein stores U.S. customer data in the U.S. within cloud platforms operated by Microsoft and Amazon.
Shein’s rapid expansion in the U.S. has attracted scrutiny from China hawks over the past year. As the company pursued its international business ambitions, it moved its headquarters from Nanjing to Singapore in 2022 and hired lobbyists in D.C.
Other concerns include Shein’s alleged use of forced labor from Xinjiang, where the Chinese Communist Party is carrying out crimes against humanity among Uyghurs and other minorities. An analysis of Shein products tested by Bloomberg in 2022 found that garments shipped to the U.S. were made with cotton from the region.
Members of Congress are concerned that Shein could be exploiting the use of a trade-law provision, the de minimis loophole, that allows the tax-free import of shipments under $800, as they typically face less customs scrutiny.
The Shein spokesperson said that it has “zero-tolerance” for forced labor and that “we require our contract manufacturers to only source cotton from approved regions.”
The Shein spokesperson also said that the company complies with U.S. reporting guidelines for de minimis shipments and that “the de minimis provision is not critical to the success of our business.”
Cotton has previously asked Biden to investigate Temu, another Chinese fast-fashion company whose growing U.S. presence has sparked concern on Capitol Hill. Cotton’s letter today relates to a new part of Shein’s expansion plan: the rollout of special software that helps it track its supply-chain relationships with U.S. vendors — an initiative that has drawn criticism from cybersecurity experts.
CNBC quoted several analysts raising concerns along those lines, in an article analyzing Shein’s effort to test its software. Dewardic McNeal, managing director at Longview Global, said that Shein’s plan could give the Chinese government “unprecedented access to sensitive supply chain data.”
In his letter yesterday, Cotton warned, “As we’ve seen with companies such as LOGINK in U.S. ports and TikTok, any amount of CCP access to U.S. data poses a national security risk.” Lawmakers are concerned that LOGINK, a Chinese logistics platform used at ports around the world, similarly allows Beijing to access sensitive supply-chain information, which it could possibly use for military purposes.
Cotton added: “The CCP would almost certainly use that data to subvert U.S. interests. This is unacceptable.” He concluded the letter by asking that Biden reply by August 1 detailing what steps his administration has taken to respond to Shein’s development of this software and if it is aware of any instances in which the CCP viewed or used data from Shein.