Is there any reason to believe Temu goods are more likely to involve slavery than the equivalent goods from other retailers?

Question

There are questions about the use of forced labour in the supply chain of consumer goods. One particular company that have been highlighted as a risk is the Chinese retailer Temu, with a Congressional report in 2023 finding:

American consumers should know that there is an extremely high risk that Temu’s supply chains are contaminated with forced labor

As part of the probe, the committee sent letters in early May to brands Nike and Adidas, as well as Shein and Temu asking for information about their compliance with the anti-forced labor law.

It seems to me that big name brands that command significant loyalty and premium prices like Nike and Adidas are almost the "opposite" of the no name very cheap consumer goods that Temu specialises in. I would have thought a more reasonable comparison would be the suppliers of small consumer goods to Walmart (in the US), Wilko (in the UK) and Amazon and those who use its marketplace.

Is there any evidence that the cheapest example of a consumer good, such as a knife, a belt or reading glasses, purchased from Temu would have a higher probability of being made with forced labour than the cheapest such good purchased from a more traditional retailer in the West?

Answer 1

Based on all the circumstances, I think it's reasonable to assume the risk of involvement of forced labour is higher with Temu than with Nike or Adidas. This isn't a claim that the latter represent no risk, it's a claim they represent less risk than Temu.

1. Temu's business model involves shipments that are exempt (the so-called de minimis exception) from inspections, duties and data provision to Customs and Border Protection (CBP), to which higher value shipments would be subject (i.e. shipments over $800 - Nike and Adidas shipments are well in excess of $800).

2. According to the committee's interim report (Select Committee Releases Interim Findings from Shein & Temu Forced Labor Investigation), Temu didn't claim to have "any compliance or auditing system to independently verify that the tens of thousands of sellers who list on Temu are not selling products produced with Uyghur forced labor."

The likes of Nike and Adidas claim to conduct inspections (announced and unannounced) of their supply chains, they claim to have supplier contracts that prohibit sourcing anything (yarns, textiles, goods) from Xinjiang, they report their compliance issues in their annual reports, etc etc, and they likely have evidence for these claims. Again, none of this is to claim they are perfect, it is a claim they are (a) claiming to care (again, Temu doesn't) and (b) they can provide some evidence of making some effort (Temu can't/won't).

3. Temu itself admitted it "does not expressly prohibit third-party sellers from selling products based on their origin in the Xinjiang Autonomous Region". Temu does not prohibit the sale of products that explicitly advertise their Xinjiang origins. Temu's website listed at least one product purported to be made from "Xinjiang Cotton". In US law - the Uyghur Forced Labor Prevention Act or UFLPA - there is a rebuttable presumption that such goods are made by forced labour, i.e. the importer must prove they were not made by forced labour.

4. As Temu is not the importer of record with respect to goods shipped to the United States, the laws against importing goods made with forced labour do not apply to it, they apply to the individual person (who isn't having their import inspected, because it's de minimis, or doing other compliance given they are just an ordinary member of the public, not a company). As Nike and Adidas are the importers of record for their goods, they are subject to the laws pertaining to the products of forced labour.

So the one hand you've got a business that isn't even claiming to care to prevent forced labour, it's not subject to US law pertaining to the products of forced labour, its shipments are exempt from scrutiny by CBP, it does sell products sourced from Xinjiang.

On the other hand you've got a business that is at least claiming to care (and to some extent can back this up), it's subject to US law (and European and UK law, I'll add) pertaining to the products of forced labour, its shipments are subject to scrutiny by CBP, and at least appears to make an effort to avoid using anything sourced from Xinjiang.

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Someone has commented that "This answer is based exclusively on faith and racism."

Wrong. My answer is not racist, it is business-ist.

I don't assume USA=good and China=bad. I haven't written or indicated anything of the sort here.

I assume that (big) businesses anywhere will often do wrong - or don't care if wrong is done - if they can profit. I assume they are often amoral profit-seekers.

A shocking assumption, I know, but there is plenty of precedent everywhere. As a consequence, many if not all legal jurisdictions have developed myriad regulations on business.

Those regulations create different (dis)incentives depending on jurisdiction and business model.

Nike and Temu are exposed to different (dis)incentives.

Answer 2

American consumers should know that there is an extremely high risk that Temu’s supply chains are contaminated with forced labor

This is technically true but ignores the realities of the Xinjiang economy. As per China's stats of GDP output per administrative region, Xinjiang as a whole is only 1.5% of its total economy. Which makes sense as they're only 1.7% of the total Chinese population. The share of goods on Temu sold from Xinjiang as a whole could thus be reasonably presumed to be 1.5% or less.

Once you correct for the fact that heavy industry is much more concentrated on the east coast of China and the fact that not 100% of Xinjiang's goods are made with slave labor, I'd be very surprised if more than 0.5% of the total value of goods sold on Temu had slave labor involved. So, yes, its plausible that some good had slave labor involved at some point in their manufacturing process but it's a bit hyperbolic to associate Temu as a whole with slave camps.

Answer 3

The operant principle in capitalist production is to maximize profit. This implies that companies are balancing material costs, labor costs, 'risk' factors, and sale price to achieve the most favorable outcome. Given the complexities of modern production chains, companies may not know — or may choose not to look too closely — at the nature of labor being used by remote contractors. This applies to expensive goods and cheap goods, and to 'status' goods and 'basic' goods.

As a point of reference, many years ago Nike — I think when they were in the early stages of marketing high-end Air Jordan athletic shoes — paid Michael Jordan a fee for his sponsorship that was greater than the combined yearly salaries of all the East Asian workers who made those Air Jordans. I'm not suggesting that any of those workers were enslaved, mind you; I'm pointing out that this is the way the system works.

The only 'risk' factors in modern production chains are:

1. legal liability for improper acts
2. bad publicity from questionable or amoral acts
3. marketing failures that result in excessive unsold commodities

(3) is negligible because because of the marketing focus of both major and minor brands. Pay the Jordans of the world enough, and you'll sell shoes. (1) is negligible because of varying laws between jurisdiction. If people in Shanghai or Mumbai (not to mention prisoners in US States like Louisiana or Georgia) are forced to work, it isn't illegal, so there's no legal risk of lawsuit to the corporate bottom line. (2) is the only real financial risk, and it's generally resolved by cut-outs: CEOs and stock holders will assert that they have 'no idea' that subcontractors are using immoral labor practices, while simultaneously seeking out subcontractors with the lowest unit prices.

Temu is no better (and no worse) in this regard than (say) Amazon, and likely no worse than a typical corporate brick-and-mortar department store. They all want to buy cheap and sell dear, and are not too interested in examining the practices of those who sell them goods on the cheap.