Congressional Pressure on SHEIN and Temu Increases — and on Nike and Adidas, Too

By Elizabeth Brotherton-Bunch
May 04 2023 |
The Nike store at the Lincoln Road Mall in Miami. Phillip Pessar is licensed under CC BY 2.0.

Policymakers have questions for the companies about allegations that they use forced Uyghur labor to make their products.

Members of Congress continue to raise concern about Chinese companies SHEIN and Temu’s alleged use of forced labor, and now leaders of a key congressional committee are looking into allegations surrounding iconic Western brands Nike and Adidas as well.

Reps. Mike Gallagher (R-Wis.) and Raja Krishnamoorthi (D-Ill.), the chairman and ranking member of the Select Committee on the Chinese Communist Party (CCP), sent letters earlier this week to the four companies citing concerns about their use of forced labor to make their products.

The Members write to each company that they heard testimony during a March hearing that suggests the brands are still importing sourcing products from Xinjiang, despite implementation of the Uyghur Forced Labor Prevention Act (UFLPA). The law, which went into effect in June 2022, bans imports from the Chinese region unless companies can definitely prove their products aren’t made with forced labor.

Gallagher and Krishnamoorthi also ask SHEIN and Temu about their use of the de minimis exemption, which allows imports valued under $800 to enter the U.S. duty-free. Not only does this allow the brands to exploit the exemption and avoid paying tariffs, it also helps them dodge customs inspectors charged with enforcing the UFLPA.

“Since the implementation of the UFLPA, U.S. Customs and Border Protection (CBP) has scrutinized 3,237 shipments, valued at $961 million,” the duo write to SHEIN. “Cotton is designated as a ‘high priority sector’ in the statue for enforcement as 90 percent of China’s cotton is produced in Xinjiang and is diffused throughout China’s domestic textile supply chains… Considering SHEIN’s numerous contract manufacturers in mainland China and heavy reliance on Section 321 for imports, we are concerned that products produced in whole or part from Xinjiang with forced labor might be present in SHEIN’s supply chain.”

There’s been plenty of congressional pressure on SHEIN this week, as a bipartisan group of two dozen Members of Congress asked the Securities and Exchange Commission (SEC) to put a halt to the company seeking an Initial Public Offering (IPO) until an independent investigation can be done to verify it doesn’t use forced labor. And the U.S.-China Economic and Security Review Commission warned last month that both SHEIN and Temu are “outmaneuvering regulators” to dominate the retail landscape.

But its heartening to see that Gallagher and Krishnamoorthi also are looking to crack down on Nike and Adidas, both of whom are among the big name brands that have been accused of profiting off of human rights abuses in Xinjiang. SHEIN and Temu have received a lot of (deserved) attention about their problematic practices, but dozens of Western companies have been accused of quietly utilizing forced Uyghur labor as well — and it’s time for that to end.

Nike also was among the companies that lobbied against the UFLPA. Despite the company’s best efforts, the UFLPA is now law — and Nike may be violating it. As Gallagher and Krishnamoorthi write to Nike President and CEO John Donahoe:

“We received expert testimony which revealed that products made by Uyghurs in forced labor camps are still entering the United States. One expert told the Select Committee that Nike is ‘sourcing garments made not only from cotton from the Uyghur Region but also visocse, lyocell, polyester, leather, and linen from the region. Continuing to import goods produced in part with the forced labor of Uyghurs potentially violates the UFLPA and creates the conditions in which the CCP is able to continue committing genocide.”

In the letters, Gallagher and Krishnamoorthi had a series of specific questions for all four companies about their production practices and efforts to ensure their goods aren’t made with forced labor. It’s worth a look to understand exactly why the Members are so concerned.

And underscoring how united Gallagher and Krishnamoorthi seem, both appeared in a joint segment on CNBC’s Squawk Box on Thursday to talk about the letters:

“Using forced labor has been illegal for almost a hundred years—but despite knowing that their industries are implicated, too many companies look the other way hoping they don’t get caught, rather than cleaning up their supply chains. This is unacceptable,” Gallagher said in a statement. “American businesses and companies selling in the American market have a moral and legal obligation to ensure they are not implicating themselves, their customers, or their shareholders in slave labor. Our message to industry in these letters is clear: either ensure your supply chains are clean — no matter how difficult it is — or get out of countries like China implicated in forced labor.”

Echoed Krishnamoorthi: “The American people deserve to know how much of what they’re wearing was produced by forced labor in China. We’ve heard from victims about the brutality of forced labor camps that are part of the CCP’s ongoing genocide against the Uyghurs and other ethnic minorities in China. These companies need to show that they’re following the law, and their supply chains are free from forced labor. This is just the first step of our investigation.”