Chinese fast fashion giant Shein is considering expanding its supply chain across the United States, but experts warn the company’s plans could pose serious cybersecurity risks.
The primarily online retailer, known for its cheap, trendy fashion items and valued at $66 billion in March, plans to sell its supply chain technology to global companies, and U.S. security experts have warned that Shein could use these software deals to spy on supply chains and steal customer data.
DeWadric McNeil, a senior policy analyst at Longview Global, told CNBC that Shayne’s involvement could pose an espionage risk.
“Given the complexity of U.S. and global supply chains, the potential for espionage and data collection is a significant risk,” McNeil said. “Shane’s software could provide unprecedented access to sensitive supply chain data that the Chinese government could potentially seize under its laws.”
Chinese law requires companies to cooperate by providing data, and although Shein has made efforts to distance itself from China, its supply chain and warehouses are still based there.
Shain moved its headquarters from China to Singapore in 2022 to ease scrutiny of the company, a strategy that Lee Keir, a former senior TSA official and now head of transportation at Chertoff Group, calls “Singaporewashing.”
“A company’s supply chain data could be seized by China even if it’s headquartered in Singapore,” Care said. “This is a clear vulnerability for U.S. customer data.”
“We take security seriously and have implemented industry standard controls to protect our customers’ data,” a Shane spokesperson told The Post. “We strive to limit data collection to the minimum information necessary to process commercial transactions.”
Schein said it stores U.S. consumer data in cloud-based solutions from Microsoft and AWS.
CNBC searched ISO databases for the two certificates for Shein or its parent company, Zoetop, but could not find any.
Shane told The Post that he obtained both certifications through a third party.
Shain’s plans to expand its influence through the U.S. supply chain come in the wake of tensions between the U.S. and Chinese economies.
In May, the Biden administration increased tariffs on $18 billion worth of Chinese imports to “protect American workers and businesses” from “unfair” competition.
“The promotion of SHEIN as a logistics company is a response, or retaliation, to the US cracking down on all outsourcing from China,” Publican co-founder and CEO Ram Ben-Zion told CNBC. “This is a way for China to regain control of the global supply chain.”
The company already boasts an extensive supply chain — Shein has disclosed 44 direct relationships and 5,000 suppliers, according to Exiger data — but it likely has a much more complex relationship map.
Ben-Zion said that Shein, and of course the Chinese government, will be able to exploit sensitive consumer data that is shared throughout its supply chain. Shein also has access to the distribution strategies of other companies, allowing it to gather information about upcoming product launches and use them to counter them with its own products.
Shane has faced significant backlash while trying to expand in the United States.
Last summer, attorneys general from 16 states signed a joint letter urging the SEC to require them to verify that foreign-owned companies are complying with provisions of the 1930 Tariff Act that ban the importation of products made with forced labor.
Allegations that Shain relied on forced labor in China’s Xinjiang region, an area banned from supplying imports to the United States because of human rights violations against the Uighur people, were circulating even before the company filed for a U.S. initial public offering in November.
The year before, New York Attorney General Letitia James fined Shein, sister company Romwe, and Zoetop $1.9 million for failing to protect consumer data in a 2018 data breach.
While Shein faces obstacles to expanding into the US, rival Amazon is looking to strengthen its ties with China: CNBC reports that billionaire Jeff Bezos’ company is planning to open a new section on its website featuring cheap fashion items that Chinese sellers can ship directly to US customers.
Amazon also recently reduced fees for merchants who sell clothing items under $20, according to CNBC.
