Chinese companies make big inroads into US markets despite scrutiny, bans

Several Chinese companies have made major inroads into the United States, and the "Made in China" brand is now a part of life for a new generation.

The companies are in every industry ranging from social media platforms and electronics to fashion and food. However, even though their products are hugely popular among US consumers, the companies have faced intense scrutiny and probes by US lawmakers.

Video-sharing site TikTok, clothing retailer Shein, e-commerce platform Temu, pork producer Smithfield Foods, and Alibaba's global online marketplace AliExpress are just a few of the very successful Chinese companies in the US.

TikTok, the wildly popular social media platform, has more than 150 million users in the US.With a 22 percent market share, its growth has far outpaced that of rival Instagram, the second-fastest growing social media platform.

Founded in 2012, TikTok launched globally in 2017. It became the most downloaded app in the world last year and has revolutionized video-sharing.

Around 43 percent of TikTok users in the US regularly get news from the site, up from 33 percent in 2022, according to the Pew Research Center.

But with the exponential growth has come scrutiny and bans.

Use of TikTok on government devices and in schools is either restricted or banned over safety concerns in more than 34 states, including Texas, Utah, Vermont and Virginia.

Montana planned to ban TikTok starting 2024, but the move was deemed unconstitutional by a federal court on Nov 30.

Congress has also repeatedly tried to ban the app, terming it a potential national security threat. Lawmakers have claimed that the platform's owner, Beijing-based ByteDance, may use the data it collects to "spy on Americans" or harvest information.

In March, TikTok's Chief Executive Officer Shou Zi Chew testified at a congressional hearing to assure lawmakers that the company was privately owned and posed no threat.

Among other notable Chinese companies showcasing the "Made in China" brand is Lenovo, the world's largest personal computer maker. Lenovo bought IBM's PC business in 2005 and made strides in the business community, which uses its range of ThinkPad laptops.

The PC maker has global headquarters in Beijing and in Morrisville, North Carolina. It has 6,000 employees in the US and thousands more worldwide.

Lenovo faced a probe by the House Select Committee in October, which suggested that the company could have links to the Chinese government and could be used for "espionage".

However, Lenovo responded in a statement that it had "completed five national security reviews by the US Committee on Foreign Investment … and was a trusted vendor to multiple US government agencies over many years".

E-commerce giant Alibaba Group was established in the US in 2014. Alibaba's AliExpress features everything from cosmetics to exercise equipment and is a popular destination for US consumers.

Shein, which started in China but is now based in Singapore, has become a huge player among the fashion set, who flock to the website for its $10 tops, $9 jeans and $5 skirts. In November, the fast-fashion brand filed to go public in the US.

Shein makes most of its products in China and ships directly to consumers in the US — its biggest market. The company is valued at around $66 billion.

The 11-year-old online brand has taken market share from US staple Gap, according to Reuters. In August, Shein partnered with Forever 21, Authentic Brands and mall operator Simon Property Group to expand its market.

Carol Spieckerman, a global retail analyst and president of consultancy firm Spieckerman Retail, said that any big business must integrate its online retail strategies with brick-and-mortar stores to expand its customer base.

Speaking to China Daily, Spieckerman said: "Retailers can't stand still on the e-commerce front. Remaining relevant will require continual improvement, and in some cases, periodic e-commerce overhauls."

Shein also faced questions from US lawmakers. Republican attorneys general from 16 states have probed the company's work practices. Shein said in a statement that it has "zero tolerance for forced labor".

Low-cost retailer Temu is attempting to follow in the footsteps of Shein and AliExpress, according to Coresight Research.

Temu launched in the US in September 2022, and in addition to competing with Shein, it is trying to move into the territory of rival discount retailers Wish and AliExpress.

Temu's goods are made in China and also shipped to customers in the United Kingdom, Australia, New Zealand, France, Italy, Germany, Spain and the Netherlands.

The site offers a range of products from clothes to home improvement goods.

Based in Boston, Temu is owned by PDD Holdings, formerly Pinduoduo, which had been based in Shanghai before moving its headquarters to Dublin, Ireland, earlier this year. PDD also is the parent company of Pinduoduo, an online discount retailer in China.

Goldman Sachs estimated that Temu generates more than $1 billion in monthly transaction value. It also has quickly become the most downloaded app in the US over shopping giants Amazon and Walmart.

"Temu has rapidly expanded its footprint beyond the US and into a number of international geographies … where we continue to see opportunities for growth in the quarters ahead," Goldman Sachs said in an Oct 4 note.

Smithfield, the largest US pork producer, based in Virginia, is owned by China's WH Group, which is based in Hong Kong.

It sells pork under the brands Armour, Farmland and Nathan's Famous. Each year, it slaughters around 30 million hogs and is a major supplier of ham and fresh pork to grocers.

Since WH Group acquired Smithfield in 2013, its annual sales soared from $13 billion to roughly $18 billion, according to The Wall Street Journal. It continues to be managed by US executives, and its products are consumed by millions of people in the US daily.

But Smithfield's Chinese ownership led US lawmakers to question its influence on the US food-supply chain.

Smithfield CEO Shane Smith said the fears were "misplaced".

belindarobinson@chinadailyusa.com