600,000 that's how many shien and TAMU packages are shipped to the United States every day I bu for machine probably every single week or every two weeks but their sharp rise in popularity has put a Target on their backs from concerns over data security there's a question whether these platforms particularly Shen and timu are more data collection companies than they are even e-commerce platforms to the ethics behind the business model that I'm shocked by the false accusation of false labor in Shin or anywhere else in China will Chinese online shopping platforms be the next casualty
of us China r the big question there is who wins in November who will be the next president of the United States this is just absolutely packed so I got this bundle of four shirts for $23 I have no work whenever I order from tenu I always go to order one thing and and then I end up ordering a bunch of other stuff you might have seen such Clips on social media guys I influencers showing off their purchases from online platforms like Shen teu and Tik Tok shop hug Hall these shopping platforms have blown up
in popularity in the US in the past 5 years online fashion retailer Shen launched in the US in 2017 by 21 it had surpassed Amazon in downloads to become the top shopping app that year combined TAMU shien and Tik Tok shop had sales of nearly $4.5 billion in 2023 in America I bought from machine probably every single week or every two weeks originally started with just clothing and then it went on to you know heels uh sandals accessories in New York City 34-year-old Fashion Stylist Natasha first discovered shopping platform Sheen in 2021 in just her
very first purchase from the app she spent $180 after discounts of course the more you buy the more discounts you get so I've had things on my cart that's been $300 plus and I've gotten it for like $210 and these are like 20 30 pieces of clothing um coats anything that I want um and I just feel like the prices these days especially postco a lot of people you know the cost of living's gone up people don't want to spend $50 $60 for a hoodie that they can buy from Sheen for $20 without the H&M
tag timu and uh Sheen have been uh doing a lot on their their marketing campaigns on social media they have been targeting these young consumers on Tik Tok and Instagram they tend to have more impulsive purchases and it's very hard to stop okay especially given very low prices okay so that actually added to uh this big growth of this these companies however not everyone is so enamored with these apps last year the US China economic and Security review commission submitted a brief to the US Congress on challenges posed by the two companies it cited data
risks source violations and exploitation of trade loopholes as key concerns TAMU and shien both have their roots in China similar to another app that has come under Fire by the US government Tik Tok it's a national security concern that Tik tok's parent company bite dance is based in the People's Republic of China and ultimately any private company in China serves at the behest and exist at the behest of the Chinese Communist party which has put forth National Intelligence laws that actually require any company operating in China to hand over data to the intelligence apparatuses in
China uh if it is requested to do so Tik Tok denied links to the Chinese government insisting that us user data is stored outside of China data is stored here in American soil by an American we that but leaked AIO from0 internal TI to this has done little toage us lawmakers okay so it is possible the algorithms decide what information is Amplified and what information is suppressed that's a major concern for the US government that basically the Chinese government could use Tik Tok to inform us political discourse which is a form of foreign interference the
ability to collect all this information on American voters with the ability to decide what content they see when that's a really dangerous combination so in April 2024 President Joe Biden signed a law to ban Tik Tok Tik Tok is currently fighting the ban in court Beijing was critical citing the ban as another example of the US unfairly curtailing Chinese economic growth [Music] with the ban on Tik Tock could TAMU and shien be next like Tik Tok shien and TAMU have Chinese Origins though they're headquartered elsewhere Chen was founded in 2008 in naning before moving its
headquarters to Singapore in 2021 temo is headquartered in Boston but is owned by China's PDD Holdings PDD Holdings is also the parent company of the third largest e-commerce site in China pin it's definitely a sign of an era of much greater scrutiny on commerce between the United States and China especially when it comes to technology especially when it comes to apps and especially when it comes to data and there's a question whether these platforms particularly shien and timu are more data collection companies than they are even e-commerce platforms do the American lawmakers have cause for
concern well back in 2018 Sheen's then parent company zop was hacked the breach leaked the personal information of 375,000 New York residents zop was fined $1.9 million for this lapse last year pinor was suspended from the Google Play Store after malware was detected giving the app unauthorized access to a user's data for example one of the types of data that it was trying to collect is data that you copy to the clipboard on your phone or that you store in the notes app um so for example if you were to copy a text message into
email it would be stored on your phone's clipboard uh pind was going after those kinds of uh of data even though they had nothing to do with the app itself TAMU is pin's shopping app for users outside of China cyber security experts say TAMU requests less permissions than the pin app and has different encryption keys yet a slew of class action lawsuits has been filed against the app over data privacy a case filed last September accused TAMU of sending messages to numbers listed on a Do Not Call Registry this June Arkansas attorney general Tim Griffin
sued TAMU alleging it is collecting residents personally identifiable information which the Chinese government can access Montana attorney general Austin nutson and 20 other Attorneys General also wrote to PDD and temu to request information about their business practices and its ties with the [Music] CCP last month House Republicans called for an investigation into tum reminiscent of what led to Tik tok's eventual ban the particular concern is that American privacy has tended to be more accepting of e-commerce companies collecting information when it's just used by the e-commerce company but American privacy becomes much more restrictive when there's
a concern that the information might go to the government this is where there's particular concern with teu and it's uh being potentially liable to be forced to turn over information to the Chinese government in circum particular circumstances for example US Government users members of the US military or individuals in sensitive Industries creating technologies that the Chinese Communist party wants to steal and has active Espionage campaigns to steal these are the kinds of individuals that might be particularly concerned with having apps that have data security risks associated with them on their phones CNA reached out to
Tamu for a response it said that it has never and will not provide user data to the Chinese government if asked I think such concerns are very much based on hysteria and the false uh belief that everything about China is the wrong thing is the uh hostile thing and for American decision makers to really believe that the Chinese government or China as a whole will have any interest in private data in the US consumers for example is ludicrous why should anyone bother about private data in the United States whatever the case temu has not lost
its appeal among customers marketing automation platform omnisend found that only 7% of 1,000 Americans surveyed trust TAMU yet 68% of them will still use the app I think honestly that's just a risk you take with online shopping so it's you know being aware that this can happen to anything um or any website that you're on but also taking the precautions to try to avoid it as best as you can the reason TAMU and Shen remain popular is their low prices now the bottom dollar price tags too are coming under the microscope this summer one of
China's largest fashion trade shows held as exhibition in Shenzhen the link fashion Expo is attended by buyers and sellers across the domestic and international supply chain over 2,500 vendors display their wees hoping to secure orders from some 20,000 retailers and brands fore [Music] according to the exhibition's website shien was one of the attendees the online fashion retailer relies on contract manufacturers like these for its offerings it works with more than 5,400 third party suppliers as part of their OnDemand model since fast fashion Motel is a bit unique so for every uh new design they only
order like 100 or 200 pieces from the supplier and they quickly test whether this piece or whether this new design will become a hit if it becomes a hit they go back to the supplier and order more pieces so I think they have um built this kind of trust and this kind of system into the suppliers which allows them to to very very quickly U make reorders and the suppliers are willing to work with them so that allow them to respond to Trends very very [Music] fast TAMU on the other hand acts as a platform
for small scale Merchants to sell their products compared to previous marketplaces where um where you try to source for goods and in China and sell in the US T did something different they control the quality they make sure that you send everything to their warehouse they do the inspection before they Shi the goods out they also do all the frontend marketing um operations customer service so that allow them to go directly to manufacturers instead of intermediaries that allow them to have very low cost and with that in mind uh they are confident that they can
scale teu and shien's lowcost business model has allowed these Chinese linked apps to dominate the US market in a short time between 2020 to 2022 Shen's market share of the US fast fashion Market doubled to 40% edging out established players like H&M Zara and Forever 21 teu launched State Side in 2022 last year it became the most downloaded app in the country onethird of Americans now shop on the platform both tapped on the supply chain in China where you have uh thousands of suppliers who can um produce things at very cheap cost and uh because
of the the competition amongst the suppliers the design the product Innovation there are lots of lots of new things been produced so that allowed them to respond to Trends very very fast they cut out of many uh add addal costs for example front stores and other highly uh inefficient ways of uh mediation for example and the aim is to bring products directly to the doorstep of consumers that means their cost overall is relatively lower than what you can expect to get from department stores or from fashion stores for example but this business model gives TAMU
inordinate power over sellers Peter Wang has been selling electronic products on TAMU for a year for the company has been criticized for pressuring suppliers to keep prices low and terminating contracts at whim under its policy sellers must bear refund and return costs some Merchants have made losses of up to hundreds of thousands of dollars te Yin way was not aware of the platform's fine policy at first for for keeping prices low gives shien and TAMU the Competitive Edge but this too is being looked at by the US government for potentially exploiting a tax loophole one
of the loopholes that they're considered to exploit is the duty-free allowance for shipments that are coming into the country known as the Dom Minimus rule so the Dom Minimus rate for the United States is $800 so anything under $800 is dutyfree um other countries have much lower rates and the issue is large volumes of textiles and other products are entering the United States without paying taxes and these are companies with very low overhead which makes them hyper competitive in a developed economy like the United States and that disadvantages a lot of of other businesses shien
and TAMU ship a total of 600,000 packages to the US daily based on a 2023 report by the select committee on the Chinese Communist party it was estimated that these companies account for more than 30% of annual dutyfree shipments that enter the country this July the figure reached 9 00,000 daily yet the select committee report claims these companies paid $0 in tariffs in 2022 it's not just the US facing this issue amid Rising competition the European Union tabled a reform in May 2023 to remove or lower its Levy threshold currently packages worth €150 or less
are exempt from Duty we have decided to do so um because this provision was uh heavily uh exploited by fraudsters uh and we also noted that up to 65% of such Parcels uh which are supposed to be below 150 Euros were actually undervalued so they were really um this was really being T taken advantage of uh just to to avoid the custom duties an estimated 10 billion doll in tariffs are lost in the US each year due to the Dem Minimus provision as of September this year 1 billion low value shipments evented the country already
equaling last year's total Shen however has said they welcome a reform of the Dem Minimus provision in a letter to the American Apparel and Footwear Association TAMU has also denied exploiting the Dem Minimus provision I do think that uh these companies are businesses right if the rules are saying that okay you don't need to do certain things and they would prefer not to do it so it's not they're actively exploiting the loophole but I mean if there's certain method which um which is cheaper for the operations they they'll exploit that this September the White House
announced plans to curb the exploitation of its dutyfree policy aimed at China founded e-commerce companies it wants to eliminate Dem Minimus exemptions on some products proposed regulations would also require more information on Dem Minimus shipments additionally buyers must provide identification such as their social security number should these measures pass the cost of buying on TAMU and shien will rise I think this provision would have deeper implications because we know that inflation in us has been a problem so this kind of products Shi directly from China allow them to tap into certain daily Necessities at a
very low cost so I think there might be wider implications if the if the cost of all these schs actually go up the low cost of products on these Chinese apps has created another pain point for importing countries this time Shoppers themselves share the blame this March French lawmakers proposed slapping a 10e old penalty on each item shien and teu sells by 2030 to find out why a look at buying habits across the Atlantic might shed some light so yeah so I paid I got this in 2022 um and I just loved how warm it
was and how stylish it was um so repurchased it in brown beige and white there's a slang term for going on a shopping spree on apps like Shen and temu it's called a [Music] hall these heels are from Shen I've got them in like multiple colors black leopard print pink I've got orange I've also got this black style here these were all about 122 $13 each and these are the ones that wrap around the ankle so naturally I have them also in the sandel version um I have them in different colors as well because they
are just so cheap so why not really Natasha's shopping habit is typical of many fast fashioned phonetics in America and elsewhere Americans doled out about $550 billion on clothing and shoes in 20123 purchasing an average of 53 new items per person last year the global e-commerce fashion Market was valued at over $820 billion by 20130 this figure is expected to double companies like Zara and H&M have been the traditional fast fashion companies but timu and Sheen actually took this to the another level took this to ultra fast fashion model instead of having a physical stores
they only operating or through digital apps so they have redefined the industry by leveraging this data so they can actually identify you know what consumers want and based on this data they can also optimize their production as well when certain items are identified to be popular orders can be placed with suppliers to manufacture items in as little as 10 days these can be shipped to customers globally in the same time frame they are actually mainly targeting the young consumers who are looking at the influencers who are actually hauling all these clothes coming from Sheen and
that actually uh affects their consumption Behavior as well you know they also want to copy what they are doing so this has actually created even bigger culture of of overc consumption and the fact that you know it's not actually that expensive actually you know helps them you know spend even more money [Music] but all these e-commerce shopping Halls are creating a problem waste one issue is the materials used by lowcost manufacturers a 2022 Bloomberg study on 15,000 pieces of Sheen clothing found that 95.2% of the items were made with new Plastics such as polyester these
are some of the cheapest Fabrics in the market most of Sheen's clothes are a blend of polyester and cotton the problem these are almost impossible to recycle this Factory in jongan China recycles discarded Fabrics including waste from clothes manufacture [Music] facturing for globally about 100 million tons tons of textiles are produced each year 92 million tons of these will end up in landfills this wastefulness is driven by fast fashion this is inherent with the fast fashion business model they want to sell uh cheaper uh Goods uh to the consumers a lot because this is made
with the cheaper materials okay the durability of the goods is actually going down so now the more and more consumers are using less and uh a fewer times uh of the of the cloth so in proposing the € 10 EUR levy on Fast fashion shipments French lawmakers cited environmental concerns yet consumption is just one part of the story from manufacturing to shipping there is a carbon price to pay according to the United Nations environment program the fashion industry accounts for 10% of global carbon emissions most of the emissions uh come from the manufacturing process in
China the power is generated by Coal Power Plant in such case there will be bigger uh emissions uh coming out of electricity use and the other is shipping okay so especially for fast fashion industry they are shipping their products uh by air okay because they want to bring the products to the consumers as fast as possible POS okay and that's something that consumers manageable Sheen however has counted that their manufacturing according to predicted demand actually reduces waste the company's Global headit of sustainability Adam Winston explained this in a CNA podcast last November so the efficiencies
that we've brought to retail is that we're able to focus on the products where there is actually demand so what that does is eliminates a lot of the over production that occurs in the industry Shen has also said that its amount of unsold clothing is less than 1% this is far below industry standards of 25 to 40% but environmental experts are skeptical during the production stage they can minimize the waste so this is definitely help for for the environment but that does not mean that they can get away from over over production still because Ultra
fast fashion model itself it's it essentially hinges on overc consumption by the consumers in the case of aen uh just last year compared to 2022 okay 2023 emission was a double unlike France the US has not passed any federal law to curb fast Fashion on environmental grounds though New York has won in the pipeline companies which make revenue of more than $100 million will be required to disclose information about their supply chain this would hold companies like shien and teu accountable for its carbon emissions water and chemical use shien started publishing its environmental sustainability and
governance reports since 2021 one good thing about Sheen's disclosure is that they still disclose on their indirect emissions coming from manufacturing as well as shipping they actually Source it from third party manufacturers so they are just paying for the service but they are actually disclosing you know how much emission is actually coming from the entire value chain but in terms of for example the waste we have no idea how much of waste uh she is actually contributing so maybe you know if they could also transparently disclose on such things think it can be even better
other companies such as Zara and H&M have started making disclosures on their post sales wastage teu unlike shien has not published any information on its environmental impact when asked it said it was committed to sustainability there always a balance right so so on one hand you need jobs you need employment you need economic development on the other hand so you have the environment which needs to be protected so so the question is that how do you balance the two and how do we continue to balance the two as for Freight crossborder e-commerce is only expected
to so an estimated 108 Boeing 7 planes worth of packages from shien TAMU alibaba.com and Tik Tok shop arrive in the US from China Daily the International Air transport Association expects e-commerce Parcels delivered by air to reach 95% by 2040 from 80% today there is a fierce competition uh between uh these Ultra fast fashion players like you know between for example uh timu and uh Shin so in order to keep their consumers happy you know they want to actually uh ship their uh products as soon as possible so they actually have to ship by air
in order to deliver their goods fast compared to the ocean Freight or sea Freight it's actually 20 to 40 times more polluting to ship products by Air One Step Sheen is taking to reduce Transportation emissions is to set up manufacturing facilities nearer to buyers it plans to work with 2,000 manufacturers in Brazil in the next 3 years and expand Warehouse facilities in the US but it's going to be a lot more costly okay to have that uh Distribution Center or even manufacturing facility uh in those countries so again it's going to uh affect the prices
so this will likely result in higher cost which eventually will you know bump up the price of the goods there is one more way where the US and Europe are coming after Chinese e-commerce apps the alleged use of forced labor this is cang a region in China's Northeast where 85% of its cotton comes from nearly half of Sang's population are weers who are mostly Muslim last June the US select committee on the Chinese Communist Party conducted four forced labor investigations on Fast fashion brands its interim findings which named shien and temu raised the alarm that
their products could be made from cotton harvested with weager forced labor so the US is particularly concerned about Force labor political prisoners um and people who've been unjustly uh imprisoned without without trial um or in kangaroo courts uh and that the their labor is is being exported to the United States but there's also an economic competitiveness aspect to it the forced labor coerced Labor uh gives those companies that use them in their supply chain a very unfair advantage against Supply chains and and labor markets that that are based on paying a living wage um and
and essentially adhering to not just us but European and other developed economy uh levels of of governance the Chinese have denied accusations of forced labor Beijing has pointed out that most of the reports of force labor is the work of one researcher German Anthropologist Adrian Zen they have accused him of fabricating reports on sang where he claimed there were at least 1 million weers detained in interman camps Adrian Zen was one of the first Western researchers to notice that the government in shinjang and local governments in shinjang were posting uh procurement contracts and procurement uh
um elicitations on line uh to essentially build reeducation camps prisons um and and large facilities that that didn't previously exist so by looking at these tenders that were being put out on the internet um by doing some interviews and then looking at satellites he was able to monitor the the build and development of essentially a network of re-education through Labor concentration camps other journalists went and on the ground looked at the facilities and were often chased away as they took photographs so I think it's pretty credible China initially repudiated the presence of these camps but
soon admitted to them in 2018 they call the camps vocational education and training centers which are meant to deradicalize weers back in 1997 WEA separatists had bombed several buses in urumi and B many episodes of violence followed including a 209 riot in urumchi the capital of sang which killed 140 people China has defended the deradicalization camps as a necessary measure against terrorism the wigle people are our brothers and sisters we fully respect each other we deal with each other as an equal if you ask whether there are bad El in the wigle people yes of
course because there are terrorist attacks related to some of the extreme elements in the wigle people they want to set up a khalifat uh state in shinjang which is completely inv violation of the laws in China and which is in opposition to the wishes of the overwhelming majority of the people in China Zen also claimed that half a million reggers were forced to pick cotton under a state sponsored labor transfer scheme parents are separated from their children who are sent to boarding schools while adults work long hours at factories or Fields there laborers are subject
to surveillance and political indoctrination China however says the program aims to alleviate poverty Beijing launched a global PR campaign inviting diplomat tourists and influencers to visit sang to see the situation themselves I'm shocked by the false accusation of uh false labor in shinjang or anywhere else in China and in more recent years I understand picking cotton has been really done by machine and I would say anyone accusing China of using forced labor in Shin Jang to pick up really does not know what they are talking about on its website Shen says that it rejects Force
labor and expects its suppliers to respect its commitment while TAMU says that it prohibits any form of force labor in its supply chain nevertheless the cotton controversy is now at the center of possible bans on Chinese products 2 years ago the US introduced the weer force labor prevention act or ufpa in response to these allegations it assumes that any import from sang is made with Force labor and banned from entering the us over $700 Million worth of Shipment has been denied entry since 2022 the European Parliament enacted similar rules this April I think at this
Shen last year actually grew quite healthily so compared to the previous year they have been able to withstand some of the pressures fairly well but the question is that uh these pressures was continue to to exist and uh so so so we can't say for sure that okay whether you have done it well you will continue to do it well data harvesting Dem Minimus loophole Environmental Protections and forced labor allegations with all these concerns are restrictions on TAMU and shiin imminent some clues of their fate could hinge on what happens to Tik Tok on January
19th that's the current deadline for the social media platform to sell to an American company or be forced to shut down in the past the Chinese government has said that it won't allow Tik Tok to be sold and so if we get to that point we could be in a geopolitical standoff that would allow for a ban bance has taken the right position of of defending their constitutional right in the United States defending the millions of users constitutional right of freedom of speech defending property rights and this is what the United States should be doing
they call itself a capitalist Society based on protection of private ownership of Rights and now you want to force the sale of Tik Tok come on this is not the United States I understand at the court of appeals in September Tik tok's lawyer argued that TAMU and shien collect more data than Tik Tock essentially putting shien and teu in the same line of fire but I think the main concern about the US is not the e-commerce function of Tik Tok and the concern is of course that it could be used to influence us public opinion
for political purposes and that basically the Chinese government could use Tik Tok to to inform us political discourse which is a form of foreign interference what we really need though is a broader framework whereby the United States government can analyze the risks posed by different Chinese apps and recommend mitigations in accordance with those risks meanwhile the lawsuit against hu for data collection in Arkansas awaits hearing state attorney generals have very broad power they can seek fines uh they can seek injunctive relief such as forcing an app to keep the data in the United States or
forcing uh enhanced disclosures of what sort of data the app is getting normally those would be uh the extent of the injunctive powers now now if the app continue to operate in violation of an that sort of order you could easily see the app being banned uh from further operation in the end as these Chinese linked platforms continue to grow They will receive increased Congressional business and public scrutiny all against the backdrop of the growing us China rivalry I would think that uh that all of these are part of the that geopolitics that we are
seeing at the moment so it's not only like uh the the the social media and the eCommerce platforms but also so over many areas right EVS new energy batteries chips and stuff so I think the contention between the two major Powers would touch upon many sectors it's important to recognize that many countries have concerns about the fast fashion business model um and about the uh potential for exploited workforces perhaps forced labor in the supply chain us China tensions don't necessarily drive those Economic and Business concerns but I think one impact of us China tensions is
that it makes it more difficult for Chinese companies to address those concerns in Washington uh when they're dealing with regulators and it's increasingly difficult to distinguish between a private company and a publicly owned or state-owned Enterprise in China and that's going to act as a constraint on Chinese businesses in the United States over the long term the big question there is who wins in November who will be the next president of the United States I would think that under a a trump Administration you're going to see more aggressive actions against China and more likely bans
and prohibitions on uh Chinese e-commerce apps under Harris Administration I think there will be firm action against China but it will take more of a tone of negotiation between the two countries I'm afraid uh this anti-china hostility to China China Bion will continue for quite some time the next four years will probably be even worse this kind of uh bashing China as if that is the only right thing may continue and deteriorate [Music]
