The Glorious Impending Death of Temu? – The American Spectator | USA News and PoliticsThe American Spectator

Last week Breitbart had an article covering a pair of interesting developments centered on the fashion industry and how market conditions are affecting international trade in that realm.

Specifically, that President Trump’s heavy tariffs on China are very bad news for a couple of Chinese online retailers undercutting competitors here in the U.S. — and related to that, “fast-fashion” brick-and-mortar retailer Forever 21’s financial troubles and bankruptcy filing.

President Donald Trump’s policies increasing duties and tariffs on products imported from China announced on Wednesday could pose an existential threat to Chinese low-quality, cheap goods shopping sites such as Shein and Temu, experts warned.

Shein, which primarily specializes in inexpensive and poorly made women’s clothing, and Temu, which sells clothing, home goods, and other items of murky origin to Americans, both rely on the use of mobile phone apps to provide instant access to “fast fashion” and rapid consumption for Americans. The extreme discounts are a result of two policies: shipping the products directly from China to the consumer, rather than importing them in large quantities, and — according to Congress and other verifiable sources — the widespread use of slavery in the Chinese manufacturing sector, including slaves imprisoned as part of the ongoing Uyghur genocide.

The low prices and immediacy of the shopping experience have made both of the applications tremendously popular among American consumers. Shein reported a record-high $2 billion in profits in 2023 and reportedly dropped by about half that in 2024 — but largely, apparently, due to competition from Temu. Pinduoduo, the parent company of Temu, tallied a net profit of $8.3 billion in 2023, based on the latest publicly available statistics.

Both have profited at the expense of American companies and brick-and-mortar establishments. In March, for example, the women’s clothing company Forever 21 filed for bankruptcy, stating in its filing that the fact that it imports its clothing to stores rather than shipping directly, as Shein and Temu do, was a significant factor in its decline.

“Certain non-U.S. online retailers that compete with the Debtors, such as Temu and Shein, have taken advantage of this exemption and, therefore, have been able to pass significant savings onto consumers,” Stephen Coulombe, a co-chief restructuring officer with Forever 21’s operating company, said. “Consequently, retailers that must pay duties and tariffs to purchase product for their stores and warehouses in the United States, such as the Company, have been undercut.”

I have no particular eulogy to offer for Forever 21, as I’m not sure any of their gear would look very fetching on me. At one time, though, there was seemingly a Forever 21 store in practically every mall in America; it’s a bit jarring to think some large fraction of those will be empty spaces once the fire sale is over and the lights turn off. Forever 21’s website is touting an “up to 95 percent off” sale, and on the front page is this message…

To Our Valued Customers –

After careful deliberation, we have made the decision to file for chapter 11 bankruptcy protection under chapter 11 of the U.S. Bankruptcy Code. We are deeply grateful for the support you have shown us over the years, but rising costs and increased competition from abroad have made our current business model unsustainable.

In connection with the filing, we are beginning the process of closing a number of stores across the U.S. Importantly, however, our stores will remain open for the time being and we will continue to fulfill customer orders placed online. We also will continue to honor customer gift cards and store credit through and including April 15, 2025. All sales both in U.S. stores and the U.S. website are now final.Accordingly, we will no longer be accepting returns or exchanges. Additionally, at this point, we are no longer offering new gift cards or credit cards.

As part of our filing, we have requested to engage in a court-supervised marketing process for a going concern transaction or the sale of some or all of our assets. Decisions about which stores will ultimately close are ongoing, pending further discussions with landlords and potential buyers. For the most up-to-date information, please visit our store locator, and you can also find your favorite merchandise at www.forever21.com.

This process applies only to Forever 21’s operations in the United States. Forever 21 stores outside of the U.S. will continue to operate business as usual.

For questions about products, warranties, or rewards, please continue to contact our Customer Service Department at 1-888-494-3837. If you have questions regarding the Company’s chapter 11 process, you can visit our case website at www.veritaglobal.net/forever21 or call us at 1866-480-0830.

Again, we are sincerely grateful for your loyalty and support of Forever 21.

Sincerely,

Brad Sell, Chief Financial Officer, F21 OpCo, LLC

Given that Forever 21 apparently sources most of its products from China, one is reminded of the parable of the scorpion and the frog. You remember that one: a scorpion asks a frog to carry it across a river, and despite the frog’s initial hesitation, the scorpion convinces the frog by arguing that it wouldn’t sting the frog because it would drown if the frog died. Midway across the river, the scorpion stings the frog anyway, leading to the death of both. The frog asks the scorpion why on earth he’d sting him, and the scorpion, as he sinks beneath the current, says, “It’s my nature.”

China’s the scorpion. Forever 21’s the frog. And Trump is the river.

It’s hard to have sympathy for either the frog or the scorpion here. Forever 21’s entire business model was to play middleman between Chinese sweatshops and Americans more interested in bulk-buying of low-quality gear than actually looking good, and that worked for a while until the Chinese decided to cut out the middleman and sell directly to the Ugly Americans.

And doing it in pirate fashion. Did you see this when it first came out? (RELATED: Trump Closed the Door on Cheap Chinese Imports. Temu Found an Open Window.)

Some Chinese Temu merchants are padding their profits by using counterfeit postage labels to trick the U.S. Postal Service into delivering packages for free. Posts on Chinese social media openly promote fake labels for as little as 60 cents, and the scam costs the USPS millions of dollars a year, Rest of World has found from interviews with sellers, logistics operators, and USPS employees.

A de minimis exemption, which previously allowed parcels valued under $​800 to enter the U.S. duty-free, drew millions of Americans to Chinese e-commerce platforms such as Temu and Shein. President Donald Trump briefly revoked the provision in early February. Merchants have tried to evade the de minimis crackdown, first proposed by the Biden administration, by storing goods in bulk in the U.S. But others are turning to illegal methods such as counterfeit postage to keep costs low.

Creating, distributing, and buying fake USPS labels is a crime, and overseas warehouse operators also risk significant jail time by processing parcels with these labels. It is likely that only a small minority of merchants use counterfeit labels, but these numbers could rise as logistics costs increase. Shipping is a major cost for e-commerce sellers, with USPS charging up to $10 for a parcel weighing about 2 pounds (around 1 kilogram).

“It’s millions upon millions of dollars. … It’s a huge problem,” a person familiar with the investigations by the U.S. Postal Inspection Service (USPIS), which is responsible for cracking down on postal crimes, told Rest of World, referring to losses caused by counterfeit shipping labels. The person requested anonymity because they were not authorized to speak to the media. “The sheer amount of loss is astronomical,” they said.

Chinese merchants using counterfeit postage labels tend to work with small warehouses in the U.S. that are willing to bear the legal risk of processing such packages, three people in the logistics industry told Rest of World. The merchants send digital files of the counterfeit labels — which have details of the shipper and recipient, a tracking number, and a barcode — to the warehouses. Workers there print out the labels, affix them to the packages, and drop them off at post offices.

One Temu merchant has been purchasing 1,000 to 2,000 fake labels daily, and sending them as PDFs to a U.S.-based warehouse since November, he told Rest of World. The labels would typically cost more than $8 each, but the fake ones cost only 5 yuan (68 cents) each, he said, requesting anonymity as his activity is against platform policy.

“With the [low] prices listed on Temu, I would never be able to make money if I paid for legitimate shipping,” said the merchant.

And then there is the fact that the Temu app can best be characterized as spyware feeding the Chinese government all of your data…

Temu and its sister app, Pinduoduo, are malware and data collection platforms acting as e-commerce applications. Pinduoduo’s risks were so significant that Google suspended the application from its Play Store in 2023 after finding malware in versions of the app. Temu, a derivative of Pinduoduo, requests and gains access to users’ devices well above and beyond anything necessary for its function and, by design, is extremely difficult to delete or remove. That Temu and other Chinese-owned firms are subject to the National Intelligence Law of China, the CCP could well have an unprecedented vector for surveillance and collection at best and a vehicle for cyber warfare at worst.

More concerning is the fact that Temu, through its parent company, does business with a company directly tied to the CCP and the Central Committee. This company, People’s Data, is — according to the Australian Strategic Policy Institute — directly involved in the party’s efforts to control both media and data. While it is unclear what data Temu or PDD Holdings shares with People’s Data, it is not a stretch to suggest that there is a connection from the e-commerce platform through to the Central Committee’s propaganda efforts.

The sheer volume of data collection, its function as a potential vector for the introduction of malware, and its links to the CCP make Temu a clear and present danger on the order of TikTok to both citizens’ privacy and the country’s national security. Like TikTok, Temu represents another front in strategic competition with China and should be taken just as seriously.

Yanking ourselves free from this kind of pernicious, predatory form of commerce seems like it’s worth a little bit of pain.

Then again, I’m not one of the volume-over-quality shopaholics the “fast fashion” industry was built on, so that’s easy for me to say.

Maybe with the reordering of international trade we’ll see a new Temu or Shein pop up in Argentina or the Philippines, or some other country willing to do a fair trade deal with Trump. If so, that would be an improvement.

“Better clothes; less espionage” comes off as friendlier than “Shop like a billionaire,” at least from where I’m sitting.

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