Chinese companies try for global images
WASHINGTON — As it expanded internationally, Shein, the rapidly growing fast fashion app, progressively cut ties to its home country, China. It moved its headquarters to Singapore and deregistered its original company in Nanjing. It set up operations in Ireland and Indiana, and hired Washington lobbyists to highlight its U.S. expansion plans as it prepares for a potential initial public offering this year.
Yet the clothing retailer can’t shake the focus on its ties with China. Along with other brands including the viral social app TikTok and shopping app Temu, Shein has become a target of U.S. lawmakers in both parties. Politicians are accusing the company of making its clothes with fabric made with forced labor and calling it a tool of the Chinese Communist Party — claims that Shein denies.
“No one should be fooled by Shein’s efforts to cover its tracks,” Sen. Marco Rubio, RFla., wrote in a letter to other lawmakers this month.
As relations between the United States and China turn increasingly rocky, some of China’s most entrepreneurial brands have taken steps to distance themselves from their home country. They have set up new factories and headquarters outside China to serve the United States and other foreign markets, emphasized their foreign ties and scrubbed any mention of “China” from their corporate websites.
TikTok has set up headquarters in Los Angeles and Singapore, and invested in new U.S. operations that it says will wall off its U.S. user data from its parent company, ByteDance. Temu has established a headquarters in Boston, and its parent company, PDD Holdings, has moved its headquarters from China to Ireland.
Chinese solar companies have set up factories outside China to avoid U.S. tariffs on solar panels from China and limit their exposure to Xinjiang, a region that the United States now bars imports from because of its use of forced labor.
JinkoSolar, a behemoth that produces 1 in 10 solar modules installed globally, has set up a supply chain entirely outside China to make goods for the United States.
Shein said in a statement that it was “a multinational company with diversified operations around the world and customers in 150 markets, and we make all business decisions with that in mind.” The company said it had zero tolerance for forced labor, did not source cotton from Xinjiang and fully complied with all U.S. tax and trade laws.
A spokesperson for TikTok said that the Chinese Communist Party had neither direct nor indirect control of ByteDance or TikTok, and that ByteDance was a private, global company with offices around the world.
“Roughly 60% of ByteDance is owned by global institutional investors such as BlackRock and General Atlantic, and its CEO resides in Singapore,” said Brooke Oberwetter, a spokesperson.
Temu did not respond to requests for comment.
Analysts said companies were being driven out of China by a variety of motivations, including better access to foreign customers and an escape from the risk of a crackdown by the Chinese authorities.
Some companies have more practical concerns, such as reducing their costs for labor and shipping, lowering their tax bills or shedding the shoddy reputation that American buyers continue to associate with goods made in China, said Shay Luo, a principal at the consulting firm Kearney who studies supply chains.
But a wave of tougher restrictions in the United States on doing business with China appears to be having an effect, too.
Research by Altana, a supply chain technology company, shows that since 2016, new regulations, customs enforcement actions and trade policies that hurt Chinese exports to the United States were followed by “adaptive behavior,” such as setting up new subsidiaries outside China, said Evan Smith, the company’s CEO.
For Chinese companies, going global is not a new phenomenon. The Chinese government initiated a “go out” policy at the turn of the century to encourage stateowned enterprises to invest abroad to gain overseas markets, natural resources and technology.