Two China-linked online marketplaces are shaking up the e-commerce market with rock-bottom prices, even as the companies face consumer concerns about labor practices.

According to a recent report, the popularity of Temu and SHEIN has grown so quickly that Amazon now considers the two companies its biggest competitors. wall street journal.

China-operated Temu, which launched in September 2022, currently has 51 million U.S. users, while Chinese-founded fashion and lifestyle retailer SHEIN has nearly 14 million U.S. downloads.

Christopher Tang, a professor at UCLA’s Anderson School of Management, said a U.S. tax loophole known as the “de minimis rule” made the two companies’ low prices possible.

The de minimis rule allows companies to ship products worth less than $800 into the United States without paying import taxes, stemming from U.S. concerns that the labor costs of imposing import duties would be higher than the taxes collected.

“They don’t actually have to pay taxes,” Tang told VOA. “That’s why they can pass all the savings on to consumers.”

Tang said SHEIN’s particularly effective internet-based business model allowed them to reduce expenses.

“They also don’t do much advertising other than selling online. They use influencers. They use what we call social commerce, so they use Instagram, TikTok, Facebook to promote products.”

“SHEIN’s model does use a lot of data analysis to predict which model will sell well,” Tang added.

Temu, on the other hand, has a unique model of engaging customers through games, coupons and text message reminders, Tang said.

“By promoting all these products on the platform and in the app, they’re pushing these products on your phone every day,” Tang said. “It’s a very exciting business model and I think it’s going to be very difficult for American companies to beat it.”

But some consumers complained about Temu and Shein to the Better Business Bureau (BBB), a nonprofit organization that rates companies’ customer service. Complaints include product quality, shipping delays and customer service.

“Temu is working with the BBB in an effort to respond to and address concerns raised by consumers,” BBB spokesperson Melanie McGovern told VOA.

McGovern said customers should make sure they understand the risks of shopping with any company before making a purchase.

“BBB always encourages consumers to review the company’s BBB Business Profile for the latest information,” McGovern said. “Consumers need to do their homework, do their due diligence, look at the profile, read everything and then make a decision based on that whether they want to shop with that retailer.”

For some customers, issues with SHEIN and Temu go beyond customer service. A parliamentary committee report last year found that Temu and SHEIN’s supply chains may use forced labor.

“American consumers should be aware that Temu’s supply chain is at extremely high risk of contamination by forced labor,” the report from the U.S. House of Representatives Select Committee on the Communist Party of China said.

In December 2021, the United States passed the Uyghur Forced Labor Prevention Act in response to accusations of human rights violations in China’s western Xinjiang region. China denies the accusations.

“It’s certainly convenient, but obviously it’s not a result of a lot of good labor practices,” said Vee Witzel, a 20-year-old student at George Washington University in Washington and an occasional Temu shopper. Knowing it’s not good for the people who work for the company, it’s a bit of an ethical dilemma for me.”

Zahaan Riyaz, 20, also a student at George Washington University, said he has avoided buying from e-commerce sites.

“I understand it to a certain extent because they are cheap options and right now people are looking for cheap options, especially in college,” Riaz told VOA. “Fast fashion brings benefits to workers’ rights It has caused a lot of problems, especially abroad, and it has also caused a lot of waste.”

Tang said it would be difficult for lawmakers or consumers to prove allegations of questionable labor practices because determining “who produced these garments and where is not easy to track and trace because the supply chain is not that transparent to many companies.”

A SHEIN spokesman said the company aims to satisfy its customers and takes steps to meet U.S. labor law requirements.

“SHEIN’s loyal customer base is the foundation of our business. We are committed to providing our customers with a great shopping experience,” the spokesperson wrote in a letter to VOA.

“SHEIN has a zero-tolerance policy against forced labor. We take transparency throughout our supply chain seriously and are committed to respecting human rights. To comply with U.S. law, we require our contract manufacturers to source cotton only from approved regions. “

A spokesman for Temuji did not respond to VOA’s request for comment.

Tang said he believes U.S. shoppers will buy from Temu or SHEIN anyway because of their low prices.

“American consumers love deals, so these types of deals are hard to beat,” Tang said.