Shein to Ramp Up Compliance Programs After de Minimis Concerns

Shein, an apparel e-commerce platform that has been in the crosshairs of the House Select Committee on China (see 2305030077) U.S.-China Economic and Security Review Commission (see 2304140034), is ramping up its staffing for compliance, according to a memo sent to International Trade Today by a person close to Shein.

In that memo, Executive Chairman Donald Tang said that recent focus from DHS on enforcement against textile industry imports in de minimis packages "underscores the importance of compliance and integrity."

As part of that enforcement plan (see 2404050034), CBP said it would be "cracking down on small package shipments to prohibit illicit goods from U.S. markets by improving screening of packages claiming the Section 321 de minimis exemption for textile, UFLPA, and other violations, including expanded targeting, laboratory and isotopic testing, and focused enforcement operations."

Advocates for the domestic textile industry and some members of Congress have alleged that cotton-containing apparel from Shein is more likely to have been grown in Xinjiang, in violation of the Uyghur Forced Labor Prevention Act, compared with clothing imported by brick and mortar retailers.

Shein recently established a "consolidated Legal and Compliance Center," a person close to Shein said. The center will be led by Shein's general counsel, who reports to the company CEO, the person said. Shein plans to boost its staffing for its in-house compliance team by 50% and increase its spending with supply chain vetting firms another 50% by 2026, the person confirmed.

Tang's email also said that "by prioritizing compliance," Shein will protect its business. Compliance is not just a "checkbox exercise," it is "a mindset that must permeate every level of our organization," Tang said. Tang also offered an email address to contact if employees feel a concern is not properly addressed, and added that the company "will not tolerate any retaliation."

Earlier this month, multiple textile leaders called for ending de minimis, saying that loophole has been “aggressively exploited” by companies like Shein (see 2405020075). In April, DHS Secretary Alejandro Mayorkas said that de minimis is based on a "false premise" that low value means low risk (see 2404090021). Shein said it had no comment.