Shein, Temu bans next front in US decoupling drive

Chinese e-commerce platforms Shein, Temu and TikTok Shop are quickly changing their business strategies to avoid bans from the US market but there’s no guarantee the shifts will succeed in what could be the next front in America’s campaign to decouple from China.

The three Chinese firms’ combined market share in the US is about 3% and could grow to about 5% by the end of this year, according to AB Bernstein, a New York-based research and brokerage firm.

The politicized drive to knock the firms out of US markets is taking varied legal forms.

TikTok Shop, an online shopping feature on the video-sharing platform TikTok, is not only facing more scrutiny after the recent passage of the Protecting Americans from Foreign Adversary Controlled Applications Act but also rising competition from Instagram’s Reels, which is designed to be more capable of helping video creators monetize their production.

At the same time, Shein and Temu have been accused by American lawmakers of failing to ensure their supply chains comply with the Uighur Forced Labor Prevention Act (UFLPA) passed last June to penalize Beijing’s systematic rights abuses against the Muslim minority group in the western Xinjiang region.

The Chinese e-commerce firms have also been criticized for exploiting the United States’ de-minimis rule, which exempts shipments with valuations below US$800 from US customs inspection and taxes, by shipping parcels to the US directly from Chinese ports.

US lawmakers have urged the Biden administration to investigate Shein and Temu over data privacy violation concerns.

”To avoid a ban, Temu has shied-away a little bit from the US market. They have not been as aggressive as we have seen them last year,” Mark Shmulik, AB Berstein