Shein Faces Scrutiny Over Data Privacy and Chinese Communist Party Relationship Ahead of IPO
The chair of a powerful House committee is drilling down on Shein’s data privacy practices and its relationship with the Chinese Communist Party as the fast-fashion giant moves closer to a U.S. initial public offering.
Concerns Raised by Lawmakers
Reps. Cathy McMorris Rodgers and Gus Bilirakis, both members of the House’s Committee on Energy and Commerce, have sent a letter to Shein asking about the user data it collects and its communications with the Chinese government. The lawmakers have also sent similar letters to other Chinese-owned e-commerce marketplaces, including TikTok, Temu, and Alibaba.
The letter states that the rise in popularity of these apps and marketplaces has resulted in sharp public scrutiny regarding their business practices, e-commerce, consumer safety, and people’s data privacy and security.
Shein’s Response
In response to the committee’s letter, a Shein spokesperson told CNBC that the company has received the letter and will be providing a response.
Shein has already faced intense scrutiny from members of Congress and local lawmakers regarding the use of forced labor in its supply chain. However, the recent letter from McMorris Rodgers and Bilirakis focuses primarily on data privacy.
Data Privacy Concerns
The letter asks Shein about its data protection practices with third-party vendors and service providers. It also questions whether the company collects biometric, genetic, and other health data from users, as well as information on consumers’ religious and political beliefs.
The lawmakers also inquire whether Shein agrees that genocide is occurring in China’s Xinjiang region and if the company can unequivocally state that its supply chain is free of forced labor.
Chinese Government Access to User Data
The letter raises concerns about the Chinese Communist Party’s access to user data. It highlights past violations by Chinese-owned applications, such as TikTok, and China’s record of accessing Americans’ information. The lawmakers express skepticism about Shein’s claim of data security, considering the Chinese government’s requirements for tech companies to allow access to user data.
While Shein insists that it is a global company founded in China, the majority of its supply chain is based in the region, potentially subjecting it to Chinese law.
Overall, the Energy and Commerce committee’s letter adds to the growing scrutiny faced by Shein as it prepares for its IPO, focusing on data privacy concerns and the company’s relationship with the Chinese Communist Party.
