Temu Hiring Compliance Experts as De Minimis Investigation Heats Up
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Temu is looking to staff up a compliance team in the United States following mounting scrutiny from lawmakers accusing the Chinese-owned e-commerce giant of doing “next to nothing” to keep its supply chains free of forced labor.
First spotted by Reuters, the LinkedIn want ads, which include two postings for a compliance officer and one for a senior legal counsel of product and trade compliance, dovetail with an investigation by the House Select Committee on the Chinese Communist Party into forced labor links to supply chains that cut across China.
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In its preliminary findings, published last week, Republican representative Mike Gallagher and Democratic congressman Raja Krishnamoorthi, both of Illinois, criticized Temu for failing to maintain “even the facade” of a program that would meaningfully comply with the Uyghur Forced Labor Prevention Act, or UFLPA, which bars from entry into the United States products made in whole or in part in China’s northwestern Xinjiang Uyghur Autonomous Region, where reports of Muslim persecution proliferate.
“It all but guarantees that shipments from Temu containing products made with forced labor are entering the United States on a regular basis, in violation of the UFLPA,” the congressional report said. It also noted that America’s most downloaded shopping app “does not expressly prohibit third-party sellers from selling products based on their origin in the Xinjiang Autonomous Region.”
Temu (pronounced “tee-moo”), which sells everything from clothing to electronics to kitchen appliances through a sprawling network of third-party Chinese merchants, often at impossibly low prices, established its American headquarters in Boston in September 2022. Neither it nor its parent company, the now Dublin-based PDD Holdings, which also owns Shanghai-founded e-tail juggernaut Pinduoduo, responded to a request for comment.
All of the job postings are for full-time, on-site positions in Boston. Its compliance officers, Temu said, will play a “critical role” in ensuring that it abides by all regulatory requirements, including “developing, implementing and maintaining effective compliance programs, policies, and procedures.” The legal counsel will be expected to work with the general counsel to maintain a “sanction screening protocol and policy, develop and maintain a product compliance system to screen merchandise, and monitor legal and policy development.”
Both the House Select Committee and other lawmakers have charged Temu, along with its rival, the Chinese-owned but Singapore-headquartered Shein, of exploiting a “de minimis” provision that exempts shipments less than $800 in value from being subject to tariffs, duties and fees, as well as potentially sidestepping more serious reviews under the UFLPA. Both Shein (pronounced “she-in”) and Temu have been implicated in the past for selling products in the United States with ties to Xinjiang. The committee’s report estimates that the two companies are likely responsible for more than 30 percent of all packages shipped to the United States under the de minimis allowance, amounting to roughly 600,000 per day or 210 million a year.
Temu, responding to Gallagher and Krishnamoorthi’s queries, said that it relies on a “reporting system” in which “consumers, sellers, [and] regulators,” can “file complaints for violations of Temu platform rules,” while Shein maintains that it doesn’t have suppliers in Xinjiang and that it has “zero tolerance” for forced labor.
Even so, efforts to close this so-called “loophole” have been ramping up. On June 15, a bicameral group of legislators, including Democratic Senator Sherrod Brown of Ohio and Republican Senator Marco Rubio of Florida, reintroduced the Import Security and Fairness Act, which seeks to block non-market economies, such as China, from benefiting from the de minimis exemption. The day before, Republication Senator Bill Cassidy of Louisiana and Democratic Senator Tammy Baldwin of Wisconsin debuted the De Minimis Reciprocity Act of 2023, which they said is designed to “stop Communist China and other countries from abusing U.S. trade laws that allow small dollar imports into the U.S. duty free.”
On Wednesday, Gallagher, together with House Oversight and Accountability Committee chairman James Comer, a Republican representative from Kentucky, urged the U.S. Postal Service (USPS) to hand over its records of Chinese-originating mail and shipments entering the country. They referred to the request as a “continuation” of the House Select Committee’s probe into Shein and Temu.
Writing to Postmaster General Louis DeJoy, Gallagher and Comer said that Chinese companies can “take advantage of the de minimis rule and ship products via commercial shipping companies, as well as the USPS, directly to U.S. consumers without paying duties and fees or subjecting their products to investigation by authorities.”
By providing information not covered by Customs and Border Production, DeJoy can offer “important insight into the volume and value of shipments from the PRC,” they said, using an acronym for the People’s Republic of China.
The congressmen ask that DeJoy provide inbound mail records and data pertaining to mail and de minimis shipments from China, including duties, revenues, pieces and weights, for fiscal years 2021 and 2022, by July 19.
The klieg light on Shein and Temu has become an extension of rising geopolitical tensions with China, which has dismissed allegations that it’s abusing Uyghurs and other ethnic minorities as “Western lies” meant to destabilize its economy.
The U.S.-China Economic and Security Review Committee, in an April brief, said that companies like Shein and Temu present a “range of challenges” to U.S. interests because they exploit trade exemptions such as de minimis, making it challenging to monitor supply sources and creating difficulties in ensuring fair conditions for U.S. competitors.
“Taken together, Shein and similar firms serve as a case study of Chinese e-commerce platforms outmaneuvering regulators to grow a dominant U.S. market presence,” it said.
