Lawmakers Probe Adidas, Nike Over Potential Forced Labor
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Letters questioning if retailers are importing goods derived from forced Uyghur labor in China are raining down from Capitol Hill.
The latest batch, directed at the CEOs of Adidas, Nike, Temu and Shein, comes from Representatives Mike Gallagher of Wisconsin, the Republican chair of the House Select Committee on the Chinese Communist Party, and Raja Krishnamoorthi of Illinois, its Democratic ranking member.
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In each one, they referred to a March 23 hearing where the House Select Committee on the Strategic Competition between the United States and the Chinese Communist Party (CCP) heard “firsthand accounts about the CCP’s concentration camps” and “expert testimony regarding the perpetration of genocide.”
Though the letters diverge in certain details, they included roughly a dozen questions about where the companies’ inputs are sourced, the due-diligence steps they’ve taken before and after the enactment of the Uyghur Forced Labor Prevention Act (UFLPA), and the audit methods they use to verify that their suppliers are in compliance with the legislation. They also asked if the retailers purchased fabric or yarn from companies with documented ties to Uyghur forced labor, including Jiangsu Lianfa Group, Luthai Textile, Huafu Fashion, Texhong Textile and Weiqiao Textile.
In the cases of Shein and Temu, whose low-value packages, shipped directly from factories in China, typically fall under the $800 de minimis threshold, Gallagher and Krishnamoorthi wanted to know if they’ve ever been challenged on a de minimis shipment valuation, whether by customs officials or a consignee. If a U.S. consumer places an order over $800, or multiple orders in a day with an accumulative value exceeding $800, they asked, are those companies able to fulfill the shipment using the de minimis provision?
The lawmakers said that they’ve received testimony that products made by Uyghurs in forced labor camps are still entering the United States despite the UFLPA, which has for nearly a year imposed a “rebuttable presumption” that all goods made in whole or in part in Xinjiang are the product of forced labor and should therefore be stopped at any ports of entry.
“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,” Gallagher and Krishnamoorthi said, giving the companies until May 16 to reply to their queries.
Shein told Sourcing Journal that it only sources from Brazil, Turkey and southern China and that it has “zero tolerance” for forced labor. While Adidas and Nike, like Temu, did not respond to emails requesting comment, they have previously insisted that they don’t have suppliers in Xinjiang. But scientists have used isotopic testing to detect the presence of cotton from Xinjiang, which produces 90 percent of the fiber in China, in garments from Adidas and Shein. And investors have warned Nike that any continued sourcing relationship with China risks contaminating its supply chain with the products of exploitation because raw material origins are easily obscured.
Gallagher and Krishnamoorthi’s missives come just as nearly two dozen members of the House of Representatives wrote to the U.S. Securities and Exchange Commission to urge it to pause any potential Shein IPO until the e-tailer can prove that it doesn’t use forced Uyghur labor. In February, a group of Republican and Democratic Senators corresponded with Shein CEO Chris Xu to seek clarity about the fashion phenom’s alleged links to exploited workers in Xinjiang. It also expressed concern that Shein might be pricing shipments under the de minimis value to “minimize exposure” to customs inspections.
Meanwhile, Shein’s global domination continues apace as it revealed Wednesday the launch of an integrated Shein Marketplace in the United States, much like the one it introduced in Brazil last month. The platform, it said, will host local and international third-party sellers alongside Shein-branded apparel products as the retail juggernaut “expands to meet increasing demands for product variety.”
