Nike, Adidas, Shein, Temu Sent Letter From House China Committee About Forced Labor

The Republican and Democratic Party leaders of the House Select Committee on the Chinese Communist Party (CCP) sent letters to the CEOs of two American companies and two Chinese companies on Tuesday asking them about forced labor and banned cotton products in the goods they sell to U.S. consumers.

At the heart of the matter is whether the apparel companies are in compliance with the Uyghur Forced Labor Prevention Act, signed into law by President Biden in Dec. 2021. Cotton from Xinjiang, where the majority of Uyghur Muslims live, has been banned since last year following restrictions on cotton products by at least one Xinjiang-based company in 2021 by Customs.

Each of the four letters — sent to Adidas, Nike
NKE
, Shein and Temu — began with the same opening paragraph. What followed were more precise issues related to the individual companies.

The letters were signed by House Select Committee Chairman Mike Gallagher (R-Wisc.) and Ranking Member Raja Krishnamoorthi (D-Ill.). In each, they had about 14 questions inquiring about banned goods in their clothing, and for the Chinese firms, inquiries about the number of shipments sent under the so-called “de minimis” trade provision. This allows for duty-free shipments of all goods priced under $800.

Dear Addidas:

The letter was addressed to Rupert Campbell, President of Adidas North America in Portland.

“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 Adidas is ‘sourcing garments made not only from cotton from the Uyghur Region but also vicose, lyocel, polyester, leather and linen.’ Continuing to import goods produced in part with the forced labor of Uyghurs potentially violates the Uyghur Forced Labor Prevention Law. We would like to offer Adidas an opportunity to respond to these serious allegations…by May 16, 2023.”

The experts were from Nury Turkel, Chair of the United States Commission on International Religious Freedom, and a study by Sheffield Hallam University in the U.K.

Dear Nike:

The below is excerpted from a letter sent to John Donahue, CEO of Nike in Beaverton, Ore. This letter also inquired about the same products Adidas was asked about.

“Has Nike conclusively identified every supplier of fabric, cotton and yarn in its global supply chains for products sold in the United States, and if yes, please provide documents and evidence to substantiate Nike’s conclusive identification. …In 2020, reporting revealed that hundreds of Uyghur laborers worked in a factory that manufactures 8 million pairs of Nikes each year. Nike claims to have verified that this factory, owned by TKG Taekwang, no longer uses Uyghur forced labor. How did Nike verify that TKG no longer uses forced labor and why does Nike still consider TKG to be a suitable business partner?”

Shein Gets its Second Letter:

The first letter was sent by the Senate by Elizabeth Warren (D-Mass.), others, on Feb. 9, 2023. This is becoming problematic for Shein, a low-cost fashion retailer existing primarily online and selling directly to American consumers duty-free.

Gallagher’s letter was sent to the same Shein executive, Yangtian “Chris” Xu.

“Since the implementation of the Uyghur Forced Labor Law (UFLPA), U.S. Customs and Border Protection has scrutinized 3,237 shipments valued at $961 million. Cotton is a high-priority sector in the law for enforcement and 90% of China’s cotton is produced in Xinjiang and diffused through China’s domestic textile supply chains. As a result, 61% of shipments denied entry under UFLPA are categorized as apparel, footwear and textiles. Considering Shein’s numerous contract manufacturers in mainland China and its heavy reliance on de minimis for imports, we are concerned that products produced from Xinjiang…might be present in Shein’s supply chain. Does Shein prohibit its contractors from using cotton from Xinjiang?”

Dear Temu:

Temu launched in the U.S. on Super Bowl Sunday with its “Shop Like a Billionaire” ad campaign. It’s now trained its sights on Amazon
AMZN
and is a big beneficiary of de minimis. Its clothes are made nationwide in China, often by small mom-and-pop stitch and sew operations.

The letter was sent to Temu President Qin Sun and its CEO Chen Lei. It was heavy on questioning about how many shipments it sends to the U.S. via the de minimis provision.

“What is Temu’s sourcing policy before a third-party seller can list on its marketplace? How often does Temu assess whether existing third-party sellers are compliant with its sourcing policy. Please provide all policies, guidelines, requirements…relevant to Temu’s enforcement of its sourcing policy.”

Gallagher said in a statement today that the House Select Committee members were “deeply troubled” by reports of companies not yet knowing the details of their apparel sourcing. And said it would further examine concerns about American companies sourcing from Xinjiang.

“Many American corporate leaders still don golden blindfolds when operating in China,” Gallagher said.

“American companies are financing the state-sponsored forced labor programs operating in the Uyghur Region,” said Turkel. “Home Depot’s 10 luxury faux wood flooring that we see in our government buildings and remodeled homes is made with PVC from Xinjiang. The Gap
GPS
, Calvin Klein, Nike, Adidas, Uniqlo, and Shein – indeed, practically all of the fast fashion industry — all source from there,” he said.

The Gap recently said it will be investing $150 million in setting up manufacturing facilities in Central America in a move to derisk from China.

When asked about source changes from China, Target
TGT
refused to comment on Tuesday.