Shein grilled on China relationship, data privacy ahead of IPO

An indication hangs outside the Shein warehouse in Whitestown, Indiana, on Nov. 29, 2023.

Scott Olson | Getty Images

The chair of a powerful House committee is drilling down on Shein’s data privacy practices and its relationship with the Chinese Communist Party because the fast-fashion giant moves closer to a U.S. initial public offering. 

Reps. Cathy McMorris Rodgers, a Washington Republican who leads the House’s Committee on Energy and Commerce, sent a letter to Shein on Wednesday asking in regards to the user data it collects and the communications it has had with the Chinese government. Rep. Gus Bilirakis, R-Fla., who chairs the panel’s Subcommittee on Innovation, Data and Commerce, co-signed the letter.

The lawmakers sent similar missives to TikTok, Temu and Alibaba. 

“Media reports indicate that Chinese-owned e-commerce marketplaces are increasingly popular within the western world. This can be a serious risk for e-commerce, consumer safety, and folks’s data privacy and security,” the letter states. “The rise in popularity of apps and marketplaces like, TikTok, TaoBao, Pinduoduo, Temu, Alibaba, AliExpress, and Shein, has resulted in sharp public scrutiny regarding the business practices of those firms.” 

In response, a Shein spokesperson told CNBC it has received the committee’s letter “and shall be providing a response.” 

Shein has received quite a few letters from members of Congress and native lawmakers across the nation in regards to the use of forced labor in its supply chain, and it’s already facing intense scrutiny from public officials who’re concerned the retailer is skirting U.S. laws. Nonetheless, Wednesday’s letter from McMorris Rodgers and Bilirakis differs in each its focus and its bite. 

While the letter touched on Shein’s use of forced labor, it focused totally on data privacy. Contrary to a few of the other elected officials and committees scrutinizing Shein, the Energy and Commerce committee has more heft in its mandate to handle issues related to consumer protections and foreign commerce.

The letter asks Shein what data protection practices it requires from its third-party vendors and repair providers and whether it collects biometric, genetic and other health data from users. The lawmakers also asked whether the corporate collects information on consumers’ religious and political opinions. 

The letter questioned whether Shein agrees that genocide is happening in China’s Xinjiang region, primarily against the Uyghur ethnic group, and if it may well “unequivocally state” that its supply chain is freed from forced labor. 

Earlier this 12 months, when asked whether it stores U.S. data in China, Shein told CNBC that information is stored inside Microsoft and Amazon’s cloud services “in data centers and regions positioned inside the USA.”

Nonetheless, lawmakers are still concerned that data on U.S. consumers can find yourself within the hands of the Chinese government. While Shein insists that it’s a worldwide company that was founded in China, the majority of its supply chain relies within the region, and it could possibly be subject to Chinese law. 

“From 2014 to 2017, the Chinese Communist Party (CCP) passed several laws requiring all Chinese tech firms to permit CCP officials access to user data. Further, all Chinese tech firms must comply with the demands of the CCP, which in some cases is a ‘require[ment] to construct [their] networks in such a way as where the Chinese government has access,'” the letter states. “Past violations by TikTok, and other Chinese-owned applications, to guard user data, and China’s record of accessing Americans’ information, undercuts any claim of knowledge security.” 

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