Why Fashion Is Becoming a Major Flashpoint in US-China Tensions
This week, US lawmakers ratcheted up pressure on some of the industry’s biggest names as the relationship between Beijing and Washington continues to deteriorate.
For decades, Chinese manufacturing has underpinned America’s apparel industry. But those once vital trade links are increasingly becoming a liability.
This week, US lawmakers queried whether some of the world’s largest clothing brands are complying with a 2022 ban on imports of products that could be linked to Xinjiang, where a substantial proportion of the world’s cotton is grown, and the Chinese government is accused of conducting a campaign of detention and forced labour against Uighur Muslims and other ethnic minorities.
Sportswear giants Nike and Adidas and Chinese-owned ultra-fast-fashion e-tailers Shein and Temu were all sent letters from Congress’s House Select Committee on the Chinese Communist Party asking for detailed information on the steps they’ve taken to ensure their supply chains are free from links to Uighur forced labour.
That wasn’t the only front where fashion was caught in the crosshairs this week. On Monday, a bipartisan group of US lawmakers called for the Securities and Exchange Commission to verify Shein does not use forced labour before allowing the company to go ahead with reported plans for a US IPO this year. US lawmakers have previously raised concerns that Shein and Temu are exploiting trade loopholes, violating intellectual property rights and exposing consumers to hazardous products.
Shein said it has no suppliers in the Xinjiang region and that it takes a zero-tolerance approach to forced labour. Most of its cotton comes from the US, India, Brazil and Australia, according to the company. Nike, Adidas and Temu did not respond to requests for comment.
The moves illustrate how fallout from the deteriorating political relationship between the two countries is expanding across trade and business. So far, concerns about data security have meant Chinese-owned tech giants have faced the biggest squeeze in the US — most recently with moves to ban TikTok. But Shein and Temu’s explosive growth in the American market and fashion’s extensive and opaque links to Chinese manufacturing have drawn the sector deeper into the fray.
Meanwhile in China — where the government has consistently denied the use of forced labour — many consumers are either unaware of Western reports on Xinjiang due to censorship, or don’t believe them because Beijing’s state-run media outlets deem them to be anti-China propaganda. The perception of bias has fuelled the market for domestic brands at the expense of international competitors, often stoked by Chinese officials and influential celebrities who have cut ties with “disrespectful” brands.
For its part, the Chinese government has cracked down on international companies involved in corporate due diligence, a service that has become increasingly critical for Western companies looking to continue working with Chinese supply chains.
A Risky Business
For fashion brands there is no neat way to guard against the shifting political currents.
Shein and PDD Holdings, which owns Temu, have sought to build more international profiles, shifting their headquarters to Singapore and Ireland respectively. Shein has also ratcheted up spending on lobbying in Washington and building out its international supply chain. But it remains the focus of heavy criticism and scrutiny. In March, an anonymous coalition known as “Shut Down Shein” launched a campaign against the company in DC and with the American public.
Many Western brands have already made moves to seek out new suppliers and invest in new risk management tools, from blockchain-based traceability platforms to DNA markers to identify the origination of materials like cotton. “Friend-shoring” — moving manufacturing to politically friendly countries — is gaining currency as a new industry buzzword.
But fashion’s supply chains are deeply entrenched in China and most brands have limited visibility over where raw materials like cotton come from. In a sign of just how complicated the challenge is, most of the apparel and footwear shipments held up in the second quarter under the US ban on imports from Xinjiang came from Vietnam, where a large volume of garments are sewn using Chinese cotton.
At the same time, major brands including Adidas and H&M are still fighting to regain their standing in China’s hugely important market after Western regulators’ initial crackdown on Xinjiang cotton prompted a consumer backlash.
It’s too soon to say how this all shakes out for the industry, but pressure is only likely to increase with US-China tensions continuing to rise and more Western markets considering moves that would tamp down on products seen to be linked to forced labour.