SHEIN and Forever 21 Are Teaming Up in a Race to the Bottom

SHEIN already saturates the online marketplace. Now, it could be aiming to take over a mall near you.

Fast Fashion behemoth SHEIN announced its partnership with SPARC Group Holdings, Forever 21’s parent company, last week. The move clears the way for SHEIN to carry its retail domination from e-commerce to malls nationwide, bringing with it goods allegedly produced through abusive labor practices and contaminated by toxins.

Forever 21 was the American mall’s top dog in the early aughts, hawking all the latest fashion trends at bargain basement prices. But the brick-and-mortar retailer’s overexpansion led to bankruptcy in 2020, from which it’s still clawing back. Meanwhile, e-commerce leveraged the retail void that COVID created by putting fast fashion into hyperdrive at impossibly low prices. And, today, it’s SHEIN that holds the largest fast fashion market share in the United States.

So what does this partnership mean for America? Nothing good!

Last week’s partnership announcement outlines that SHEIN will tap into Forever 21’s retail spaces to sell its goods, and Forever 21 will reach new customers through SHEIN’s e-commerce platform. There are real reasons for concern here.

SHEIN won its retail dominance by exploiting a U.S. trade law intended for American tourists to easily bring their souvenirs – the de minimis provision. This rule allows goods to enter the U.S. duty-free and without inspection if valued at $800 or less.

Recent years have seen skyrocketing de minimis shipments, with SHEIN and Temu, another Chinese e-commerce retailer, leading the charge. These two companies alone are responsible for more than 30% of all packages shipped to America under the de minimis provision, the House Select Committee on the Chinese Communist Party reported in June. It’s this loophole that has become the foundation of SHEIN and Temu’s meteoric business success.

The committee’s report calculates that Temu and SHEIN ship roughly 600,000 packages into the U.S. every day through the de minimis exception, totaling 210 million packages that enter the U.S. every year without any import duties. In 2022, Shein and Temu’s import duties bill came to a stunning $0. In contrast, H&M paid $205 million in U.S. import duties, and Gap paid $700 million.

Moreover, the de minimis provision also ensures reduced scrutiny of SHEIN and Temu’s direct-to-consumer shipments, meaning that the companies could be sending items that are made by forced labor and should be barred from entry by the Uyghur Forced Labor Prevention Act.

As Sheffield Hallam University’s Helena Kennedy Centre evidenced in its 2021 report, dozens of the world’s leading textile companies around the world are purchasing fabric and yarn from Chinese manufacturers that the report links to cotton grown in the Uyhgur region, where the Chinese government has organized an extensive system of forced labor camps. Critically, the authors find that suppliers are omitting the origin of their materials, making the cotton-based apparel supply chain increasingly opaque and complex.

For the past several months, the Human Rights Foundation has reported potential manipulation of its Uyghur Forced Labor Checker, a Google Chrome extension designed to help online shoppers identify brands that have been linked to forced Uyghur labor. In what appears to be an orchestrated attack on the checker, a surge of use was coupled with a “barrage of one-star ratings” on Google that bore the hallmark of bot activity.

It seems highly probable that Forever 21 will join SHEIN in its evasion of customs and duties through exploitation of the de minimis loophole, meaning that still more goods with questionable origins will enter the U.S. without appropriate duties and inspections. It’s only a matter of time before other traditional retail companies join them.

But you can take action. Join us in telling Congress to support the legislation to close the de minimis trade loophole!