Concerns about Shein and Temu Expand from Sustainability to Sourcing and Trade

Background: What sets Shein and Temu’s sourcing strategies apart from other US fashion brands?

Leading US fashion companies have increasingly turned to sourcing diversification to reduce supply chain risks and market uncertainties. For example, industry surveys and firm-level analyses consistently found that prominent US fashion brands and retailers typically source from more than 10-20 countries. Notably, “reducing China exposure” is a growing trend among US fashion companies, given the concerns about the rising US-China trade tensions and geopolitics.

Instead, Temu and Shein are notable for their reliance on Chinese suppliers, with Temu primarily shipping products directly from China rather than US-based distribution centers. This business model may be explained by two factors.

One is to leverage China’s strengths in making apparel products with greater varieties and smaller quantities. In other words, while countries like Bangladesh and Cambodia may be better suited for sourcing large orders, “Made in China” can remain overall price competitive for a wide range of products requiring a smaller minimum order quantity. In this way, China can offer greater flexibility to Temu, which intends to manufacture various products while controlling costs.

Another possible reason is to take advantage of the de minimis rule.” Under US customs law, specifically the Trade Facilitation and Trade Enforcement Act of 2015, import duties are generally waived for goods with a value of $800 or less per person per day. Therefore, Temu’s shipping from China to US consumers is likely to be eligible for the benefits.

Discussion question: What shall we do about Shein?

Further reading:

Author: Sheng Lu

Professor @ University of Delaware

31 thoughts on “Concerns about Shein and Temu Expand from Sustainability to Sourcing and Trade”

  1. After the recent discussion in class about if U.S. fashion companies should increase sourcing diversification, it was interesting to find some validation after reading this post. For instance, many U.S. fashion companies have recently been increasing their sourcing diversification. By doing this, companies can reduce supply chain risks, market uncertainties, and increase flexibility. However, it may be important to consider that sourcing diversification could potentially lead to some sustainability and responsibility issues by having multiple sourcing hubs in different locations. For example, having these multiple locations could lead to more environmental impacts with transport, not being able to maintain sustainable product, workplace or labor practices, and dealing with different country/region laws and regulations. This is not to say that sourcing diversification is a bad thing, but it may not be ideal or effective for all companies to employ in their business practices. Although sole sourcing from one location may provide brands like Shein and Temu benefits on aspects including tariff rates, import/export duties, and cost reductions, putting all your resources into one country can increase vulnerability. For instance, if the country a company is sourcing from is in economic distress, having political/social turmoil, or experiences a natural disaster, the company will risk being exposed to all of those impacts. Therefore, it’s essential for companies to have contingency plans in place to mitigate such risks, or increase their sourcing diversification to help better combat those risks with flexibility.

  2. It was very interesting to read this article and watch this video after we had talked about how sourcing diversification has become a new normal for many brands now. The dominant sourcing base for most brands has been Asia but a lot of US fashion companies are straying away and wanting to diversify their sourcing because they want to reduce their “China” exposure and want to work with many more suppliers. But in this case, Temu and Shein are very dedicated and reliant on Chinese suppliers. For some brands sourcing from China is much more beneficial and that is the case with Shein and Temu. Some benefits even include cost reduction and import and export duties. There are risks in both strategies so companies need to anticipate those risks and decide what is best and most beneficial for their company based on sourcing.

  3. After learning about sourcing diversification in class, it was quite interesting to find Shein does the exact opposite. When it comes to sourcing, Shein has certainly made a name for itself as a fast-fashion brand that offers trendy and affordable clothing options for consumers worldwide. However, there has been much debate around their practices, particularly its heavy reliance on factories in China.

    In contrast, source diversification is a sourcing strategy that involves spreading out production across multiple factories and countries to reduce risk and ensure a more sustainable supply chain. This approach can help companies minimize the impact of unexpected events like natural disasters, political instability, or labor disputes. Fortunately for them, Shein has cut corners and found ways to get away with it. Specifically, import duties have been waived due to the extremely low costs of goods.

    As consumers, we have the power to influence the practices of the companies we choose to support. Although it is tempting to buy cheap, trendy clothes, it’s important to consider the ethical implications of their sourcing practices. By supporting companies that prioritize source diversification and prioritize ethical and sustainable sourcing practices, we can help promote a more responsible and equitable fashion industry.

  4. Prior to this article, I do not believe I had heard of Temu but Shein’s sourcing process and the secrecy around it is fascinating to me. While it has long been widely suspected that they treat their employees unethically, (especially those within the factory spaces) given their prices, it has been difficult to prove. Additionally, Shein’s prices are so ridiculously low that it has brought up questions of how they still manage to make money while essentially price gouging even their fast fashion competitors. While it still seems to be unknown exactly how they have such low prices and still make money, it is hypothesized that much of it comes from them sourcing out of China.
    It will be fascinating when it is hopefully eventually publicized how they source their items and what loopholes they are using in order to get such low pricing. Additionally, this was especially interesting given all of our recent discussions on factory diversification. As many brands discovered during Covid, sourcing solely from one country (such as China) can cause significant issues if something goes wrong in that country. I would also be curious to know how they were affected by Covid given their sole sourcing is out of China. While it wouldn’t surprise me if they were somehow able to still produce and sell products, I wonder if their production or sales were affected and by how much.

  5. Prior to watching this video and reading this post I was unaware of just how dark fast fashion has gotten. I am of course aware of the lack of sustainability surrounding fast fashion and specifically Shein, but was not educated on their acts of forced labor. To hear about forced labor camps and survivors was simply shocking. With this information being publicly published I am surprised by how many are still turning to sites such as Shein for their apparel needs. There are of course the issues surrounding sourcing as well. Leading US fashion companies have begun to turn towards sourcing diversification in order to reduce supply chain risks, market uncertainties, and in attempts to avoid Chinese exposure. It is interesting to see brands such as Shein and Temu do the exact opposite and rely on China for their sourcing. China is known for their cheap labor and fast turn around. In order to keep up with their fast fashion business model I guess it would make sense for Shein and Temu to be so reliant on China. I was also shocked by the fact that they are not obligated to pay tariffs on their goods. I know there are many exceptions when it comes to trade agreements, however, I am having a hard time wrapping my head around the “de minimis rule.” This seems like a bit of a cop out and is defiantly unfair to those brands who are using diversification of sourcing to source more sustainably. I am grateful that this information is being published and that consumers are becoming more knowledgeable in regards to the supply chains of their apparel. With this knowledge it is now up to us as consumers to make better shopping decisions and I can only hope that we see more of shift away from fast fashion and better legislation restricting such practices.

    1. Great thoughts. As you see, apparel sourcing is getting more complicated because of all these economic and non-economic factors. So one major challenge facing companies is to fully understand its supply chain-knowing exactly where each component is made. I assume this also complicates companies’ further efforts to diversify their supply chains.

  6. As we have learned in class, source diversification is becoming more popular, and is beneficial for brands to follow this strategy. It is no shock to me that Shein does the opposite and focuses on China for their sourcing. Additionally, Shein and Temu not paying tariffs is something that stood out to me. Considering the brands already have very cheap items because of forced labor, cheap materials, etc., avoiding tariffs shows what loopholes they have. Learning more about Shein and how its app is owned by Chinese firms was something that I was unaware of. It makes me think of how much worse can fast fashion companies get. The Chinese communist party should be accountable for their actions. The future of fashion, or present fast fashion in general, should not be allowed to get away with these harmful practices.

  7. Indeed, sourcing is closely linked to many other critical aspects of the fashion industry, including sustainability and social responsibility. A lot more needs to be done further to make the supply chain more transparent and traceable.

  8. After our lectures on sourcing diversification, I really enjoyed this article because it was fascinating to read that Shein does the complete opposite and is known for their reliance on Chinese suppliers. In FASH455 we mainly focused on reducing exposure with China and trying to sway away and source from other countries. Companies have been adapting this strategy and increasing their sourcing diversification which have reduced supply chain risks, market uncertainty and increase in flexibility. Considering how popular Shein is and having no sourcing diversification is a huge issue and creates major problems especially within the environment. Fast fashion brands like Shein are the main causes of the rising issues in the fashion industry and it starts with just manufacturing in China. China has many issues that come with manufacturing like environmental impacts, poor labor practices, lack of quality control, sustainability and transparency which is why there needs to be changes.

  9. In order to combat immoral practices in fashion, it is important to understand the supply chain and how companies such as Shein are able to get away with operating through things such as loop holes. I was unaware that Shein is able to export to the US tariff-free, because they would only be taxed on shipments over $800. Since their clothing is so cheap, they can get away with this. Basically, companies like Shein and Temu have been sketchy since the beginning. As another student mentioned, it is so outlandish to me that there isn’t a lot of information available on how their prices are so low, how they are still able to make money, and how they have dominated the fast fashion industry. Shein relies so heavily on their Chinese suppliers, and them sourcing from China is how they are able to keep costs low, but this comes with the fact that they are abiding by China’s poor labor and environmental practices.

  10. After having discussed this topic in class, reading this and watching the video really tied everything together. Its good to see that many brands are expanding their sourcing bases especially with rumors of forced labor in Chinese factories. China has been known to have more advanced production technology and lots of natural resources which does make certain companies dependent on them if they need speedy, mass production. Its surprising that even with import tariffs, Temu can still ship from China. I would hope that in the future there would be less loopholes so brands like Shein and Temu can stop profiting off Chinas forced labor.

  11. It has been interesting reading my peer’s opinions on the above post about how to deal with Shein moving forward. I, like most of the previous commenters, was unaware of the loophole that companies such as Shein and Temu are abusing to absolve them of paying tariffs when shipping to the US based on the quantity that is being shipped. I think the only way to try to dissolve this practice is to put in place stricter laws and regulations when it comes to shipments coming from China from companies such as Shein and Temu. I think the larger issue at hand is cultivating a better relationship between the US and China so that both countries can band together to flush out brands such as Temu and Shein.

  12. As discussed in many readings, videos, and class discussions, sourcing diversification has become increasingly popular across brands in order to reduce supply chain risks, China exposure, and other uncertainties. Shein is doing the opposite. They are sourcing directly from China in order to avoid tariffs, and they are doing so in such inhumane ways. It is obvious to people and sort of engraved in society that fast fashion is “bad” and unsustainable, but this video shows just how off-putting these brands are especially in regard to their production and business models. I knew that the labor in production was harmful but prior to this video, I had no idea that Shein used labor camps and that it is way more political than it seems. As college students, people tend to acknowledge that they know buying from Shein isn’t good, but they justify it with the price. I wish that more people could truly understand the harm surrounding the production of these clothes and how genuinely damaging these brands are not only to those who are involved in the labor but also to the planet and the fashion industry itself.

  13. The question “what should be do about Shein?” is very convoluted. After reading the article, it is important to note of Shein’s reliance on China, however, they have actually recently opened up distribution centers within the United States to get shipping orders out faster. The brand is known for its cheap and quick business model, one in which consumers seem to prefer these days compared to anything else. Because fast fashion is so prevalent within the industry, it is hard to say what should be done about Shein. I believe there are only two potential ways to at least lesson its affect on the environment and to stop its success. One way would be ensuring consumers know of the detrimental affects it is having on sustainability, as consumers are becoming increasingly more aware of the the fashion industries wrongdoings and environmental concerns. I truly think the average consumer just doesn’t know the practices Shein uses, and should be more widely discussed. Secondly, there needs to be stricter laws and regulations regarding their sourcing and labor practices. The reason Shein can get away with producing such cheap products is because their loophole on tariffs and continued use of unethical labor.

  14. The video and article above definitely bring me back to the discussion we had revolving sourcing diversification in class earlier this semester. I think that brands involving themselves in sourcing diversification is a smart idea because they decrease chances of facing supply chain disruptions by distributing production across multiple factories. However, I am not surprised that Shein and Temu have done the opposite when it comes to sourcing diversification because they are known for their partnerships with Chinese suppliers which makes their products so inexpensive.
    I think that is is important for fashion brands to involve themselves in sourcing diversification for a number of reasons, but mainly to pull away from China. In the video, I found it very off putting that Shein’s practices in China include forced labor and labor camps in order to produce clothing. By US fashion brands using sourcing diversification, they are avoiding unsustainable practices in sourcing and factories. I think Shein’s practices in factories should be voiced to a larger audience of consumers, so that they know where and how their Shein clothing is really being made.
    In regards of what Shein should do, I think Shein needs to veer away from fast fashion and look into sourcing diversification. While this will be off putting to consumers who enjoy Shein for their cheap prices, but are unaware of their practices, those who are suffering the unethical labor will be helped.

  15. The more I learn about Shein, the more I realize how unethical of a company it really is. This is very unfortunate, because it is one of the most popular brands right now, especially in college age girls. We’ve learned quite a bit in this course about companies wanted stray away from China and diversity their sourcing. However, Shein is not surprisingly doing the opposite of this. Shein and Temu have partnerships with Chinese suppliers which makes the products so cheap, which is mainly why they are so popular. I do not see this stopping anytime soon, as if Shein raises their prices, I doubt they will still dominate the fast fashion industry. Shein uses very unethical practices, so it it really is a shame they are still so popular.

  16. As mostly everyone knows just how bad of a company Shein is it was crazy to read about and listen to all the loophole that they and Temu go though. Especially in other class lecture, learning about a number of tariffs with China and all of these goods that are getting stopped at the US border, Shein seems to be quite smart with their business plans to be able to find loopholes around all of these matters, and frankly it is quite scary. And seeing that their companies continue to grow after all that we know about the brand is truly a shame. Though they do know what they are doing, prying on those who can’t afford a lot, especially in this economy and are into changing trends.

  17. We have to admit that we do shop from fast fashion brands. This could be because of cost or being trendy. However, many don’t realize that someone is not benefiting from this. These people are the workers that made the garments in poor conditions with unfair wages. We can blame many for this. I enjoy hearing in class knowing that retail brands are looking at expanding to other countries for sourcing. This can help the industry to a more safe and fair way for everyone involved.

  18. The discussion question of “What we should do about Shein?” is an extremely fair one considering all the bad news they bring in regarding their sourcing practices and how consumers continue to purchase from them. While we know Shein is known as a very unethical and unsustainable fast fashion brand it is truly interesting to me to see the words “Shein” and “diversification” in the same article because of their heavy reliance on sourcing from China. Something that really stood out to me was the fact that these two companies do not pay their tariffs on top of forcing labor on their employees and providing some of the most unethical working conditions. This just shows how much these companies have gotten away with due to their popularity among consumers. Unfortunately, I personally do not think Shein’s unethical sourcing practices will change due to how many consumers still buy from them because of their convince and cheap merchandise. I think people would just need to stop supporting them all together for any change to be made.

  19. The video “Are Shein and Temu ‘problematic’ due to forced labor?” addresses how both of these fast fashion companies are changing the way Americans buy apparel. Both apps, owned by Chinese firms, are taking over the App Store with their ease of purchasing products from your smartphone at extremely low prices. These companies have ties to the Chinese government and are known to rely on apparel manufacturing in Xinjiang, a region cited for its involvement in forced labor practices. This is causing a serious disadvantage to American clothing companies because their products are being severely undercut by these two apps. Additionally, bulk sales from China are generally subject to American tariffs, but because each Shein and Temu sale is processed cheaply and individually, both companies are able to sell hundreds of millions of dollars worth of clothing in the U.S. tariff-free.

    In my opinion, this is one of the many reasons why the U.S. should reduce apparel sourcing from China. Many fashion companies are starting to become risk-averse and want to improve their sourcing strategies. Therefore, countries are searching for alternative options to sourcing clothing from China. The U.S. is beginning to reduce their reliance on apparel sourcing from China in an effort to increase their diversification as well as taking into consideration both economic and non-economic factors related to trade. Decreasing sourcing from China due to traceability and supply chain problems is a significant factor for U.S. fashion companies to achieve their ultimate diversification goal. Rather than concentrating fashion sourcing in one place, such as China, I believe it would be prudent to expand U.S. fashion sourcing to other Asian countries in an effort to avoid issues such as forced labor in China.

  20. Temu and Shein are two brands that rely heavily on Chinese suppliers instead of attempting to reduce China exposure as other brands are doing. It was interesting to watch this video after learning in class about brands attempting to diversify themselves. These brands are instead changing the way that consumers shop and promoting the idea of fast fashion with extremely low prices that are seemingly too good to be true. These brands are promoted to becoming “the next tiktok”. They are benefiting from sourcing from China with factors such as cost reductions. Looking at the harmful impact these brands are having on the fashion industry it makes me think as a consumer more about where my products are coming from. The future of fashion must change and make a major shift away from the fast fashion practices promoted by Temu and Shein.

  21. One question that immediately came to mind after watching that video was, “Why doesn’t the US seize shipments that come from Chinese brands that participate in forced labor”. While I understand this would be somewhat difficult, why hasn’t the US considered this? I know the US seizes goods being imported for US fashion brands that have sourced goods where forced labor has occurred, but could this be a possibility for brands like Shein? I think other brands are seeing the success of brands like Shein and Temu and may try to imitate them. To brands who are diversifying, this situation seems unjust. Of course, it is easy to just rely on China and get the lowest prices while disregarding their unethical practices, but I think brands who are doing this will eventually be penalized for this in the future. One last note, while sustainability is considered a consumer trend in the fashion industry, I have a hard time believing this because of the increasing popularity of Shein.

  22. It is alarming how Shein and Temu have managed to circumvent US tariff laws. These companies have infiltrated US fashion in such a way that consumers do not care about the ethics behind the brands. I know many people who are aware of the negative impact that Shein has both environmentally and ethically and who still continue to shop there because of the low prices. I think that the US should investigate further into some of the data risks surrounding brands like Shein and Temu. I think the US should also crack down on these tariff loopholes that these brands are using and force them to pay tariffs to sell their products in the US. Shein is hurting US brands and as the video said, US brands are being undercut at every stage of the manufacturing process.

  23. Even though consumers say they support sustainability and would not support a brand that does this, the fact of the matter is that Shein and Temu still make a profit from those who just can’t resist their absurdly low prices. Whether it’s ignorance or hypocrisy, a large chunk of consumers still buy from Shein and Temu. This makes me believe that these companies cannot be stopped at the consumer level. If not banned under the pretense of data concerns mentioned in the video, the app should be held accountable for its exploitation. Potentially, the tariff rules should be revised to punish those who abuse tariff loopholes.

    Further, I wonder how Shein has been affected by the Section 301 tariffs. Is their business being hurt at all?

  24. I already am pretty knowledgeable about how terrible of a company Shein is due to its inhuman labor forces and treatment of their workers. After watching this video, I am only more disheartened about how tragic the company really is and how it is even becoming worse. Both Shein and Temu have the commonality of being two companies that have “trendy” clothing that appeal to people at extremely low prices. This draws the attention of many consumers because they know they can get clothes more in bulk without spending a countless amount of money. However, the negatives outweigh the positives and people are becoming seriously harmed in the production of these products. Shein and Temu receive so much sales due to the easy purchasing access that their Apps provide. However, what a lot of consumers do not know or choose to ignore, is that these apps are owned by Chinese firms and are reliant on forced labor.

    1. It’s very disheartening that these companies pray on consumers who cannot afford apparel at high prices. Many people will blame their customers for supporting them and, while I do agree that consumers must take accountability for their purchasing behavior, I don’t necessarily think that it should be the consumers burden. Many people who shop at Shein and Temu do so because it is all they can afford. Many of them are college students, like us, who are barely getting by. These consumers also tend to be poorly educated on the damaging consequences of fast fashion. I believe that government laws should be put into place to prevent these companies from getting away with so may unfair policies.

  25. Shein has been beyond problematic in the fashion industry. While there are many issues, I will first start with their child labor and general labor abuse issues. They have exploited employees in numerous ways and created an unsafe work environment for employees. Their employment of children is well known, and yet consumers still continue to shop their brand because of its cheap price. In addition, Shein has knocked off the designs of smaller artists. They have directly and clearly managed to steal the creative and fashion design ideas of smaller brands. This is unethical and simply illegal, but it has happened to many small businesses. It can really hurt the success of small businesses and is harmful to them. It is honestly sickening to know that people still shop from Shein. Regardless, it is of the utmost importance for lawmakers to intervene on this issue and provide regulations to keep brands like Shein, and Shein itself, in check. There need to be financial and trade penalties placed onto Shein for their unethical business practices and copyright infringement violations.

  26. Fast fashion has spiked significantly in the past decades and, to no surprise, it is incredibly damaging to the environment. Not only that but it promotes unethical working conditions for garment workers. One of the reasons why fast fashion companies, like Shein and Temu, are able to sell goods at such extremely low costs is because of the low wages they pay their workers. However, what I didn’t know is that these companies are able to find loopholes to evade taxes. Since they are not paying tariffs on the goods they produce, they are able to keep their prices as low as possible without compromising their profit margins. Consumers love the idea of getting the latest trendy apparel at a fraction of the cost. However, many will turn a blind eye to the unethical practices of these businesses. Or, rather, they are uneducated on how these companies are able to sell goods at such low prices. Either way, these fast fashion companies will never change their ways so long as they are making profit. I believe that more information needs to be shared with consumers in order to fully understand the gravity of this situation. only then will fast fashion purchases slow down.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: