Shein, Temu and the China stigma

Hi, this is Sarah in Hong Kong. Chinese-origin companies like PDD Holdings Inc. and Shein have tried to rebrand as global entities, but they [View in browser]( [Bloomberg]( Hi, this is Sarah in Hong Kong. Chinese-origin companies like [PDD Holdings Inc.](bbg://securities/PDD%20US%20Equity) and Shein have tried to rebrand as global entities, but they still can’t escape their roots. But first... Three things you need to know today: - Apple hit a new high on yet another spurt of [AI-fueled optimism]( - Regulators are cracking down on Uber and Lyft in [their biggest market]( - Tech austerity claims its latest victims in [Salesforce job cuts]( Reflexive distrust PDD’s Temu says it’s based in Boston and fast-fashion rival Shein has relocated its headquarters to Singapore. That hasn’t stopped the glare of close scrutiny from US and European politicians wary of the low-cost retailers and their ties to China. The EU is now working on import duties for cheap goods from foreign online platforms, [moving]( to close a loophole that’s benefited AliExpress, Temu and Shein. In the US, lawmakers have raised data privacy and forced labor concerns about Temu, with Arkansas even [suing]( the shopping app. Shein, after also facing forced labor allegations in the US, is pivoting its public listing efforts to London. For Chinese companies, political and geopolitical acumen is now a business necessity. They have to grapple with a kneejerk presumption from foreign governments of their fealty to the Chinese Communist Party. While at home, no one wants to risk angering Beijing by being too obviously focused on international markets — where growth prospects are much better than in the troubled domestic economy. Shein, despite no longer being headquartered in China, is still at the [whim]( of Chinese regulators for its overseas listing ambitions. PDD, which moved its “principal executive headquarters” to Ireland last year, later clarified to domestic media that its headquarters have “always been in Shanghai” and that won’t be changing. The best known example of this, of course, is TikTok parent [ByteDance Ltd.](bbg://securities/1439927D%20CH%20Equity), which is under [pressure]( to divest the US operations of its signature service. The company has been buffeted by repeated blusterous critiques from US politicians and encouraged to do something that Beijing would almost certainly prohibit: sell the algorithms and tech that make TikTok tick. China’s once-swaggering tech giants and most promising startups are now keeping a low profile. Remember [Made in China 2025](? Today, Beijing is much more understated, even if its industrial plan remains largely the same. The country’s leaders are still pursuing tech self-sufficiency and, eventually, global dominance, grand as that sounds. Chinese investors tell me that they’re scouting out AI projects in Silicon Valley, but opting for small, under-the-radar stakes. Domestic AI founders are [heading]( to relatively neutral ground like Singapore and the Middle East. In private conversations with Chinese tech players, the issue of politics is often alluded to with the vaguest of phrases. One told me he’d discuss anything but China politics. The 7 million of us living in Hong Kong have first-hand experience of the effects of the political wrangling between the world’s two biggest economies. When OpenAI [blocked]( developers in both mainland China and Hong Kong from accessing its software and tools, it left us in limbo. Users in the financial hub also can’t readily use many Chinese AI models — such as Baidu Inc.’s Ernie bot — which require a mainland Chinese phone number to register. The digital decoupling between China and the rest of the world has deepened in my eight years here, driven from both sides of the Pacific. Contacts in Hong Kong have told me that there is already a greater political impetus to reduce its dependence on Western cybersecurity providers in favor of Chinese alternatives. Over time, the designation of “sensitive” tech has expanded from military applications to also include software and consumer tech. US lawmakers are flagging security risks for anything from China-made construction cranes to shopping apps and biotech. The Temus and Sheins of the world are changing addresses to try and limbo under these attacks. In China, of course, things have long been even less hospitable, with foreign tech platforms choked off one by one. Last year, LinkedIn’s localized version was shut down. Not to mention that the Chinese internet is aggressively censored behind the Great Firewall that won’t even spare website [archives](bbg://news/stories/SEKDPHTP3SHV) from decades past. A potential Donald Trump re-election in the fall could further amp up these trends. With geopolitics now at the forefront of business concerns, I’ve decided to head back to school this fall to focus on studying the intricacies of international and global affairs. It’s not easy for all sides to understand each other in the din of political noise, and harder still when we exist in almost completely separate digital ecosystems. But someone has to try.—[Sarah Zheng](mailto:szheng244@bloomberg.net) The big story Amazon sold a used diaper, and a mom-and-pop business [paid the price](. Paul and Rachelle Baron began selling washable swim diapers on Amazon after designing the product for their infant son. Although it quickly became a best-seller, one disastrous review changed everything. One to watch The Heritage Foundation's Tech Policy Center Director Kara Frederick joins Caroline Hyde and Ed Ludlow to break down misinformation swirling on major social media platforms after the assassination attempt on former President Donald Trump at a campaign rally in Pennsylvania. Get fully charged Stripe’s valuation reached $70 billion in [Sequoia deal.]( Yandex founder to return as CEO after [sanctions dropped.]( Singapore’s Princeton Digital Group plans to double the capacity of its data centers in three years [to meet AI demand.]( Silicon Valley’s Trump backers cheered the [selection of JD Vance as his running mate.]( More from Bloomberg Get Bloomberg Tech weeklies in your inbox: - [Cyber Bulletin]( for coverage of the shadow world of hackers and cyber-espionage - [Game On]( for reporting on the video game business - [Power On]( for Apple scoops, consumer tech news and more - [Screentime]( for a front-row seat to the collision of Hollywood and Silicon Valley - [Soundbite]( for reporting on podcasting, the music industry and audio trends - [Q&AI]( for answers to all your questions about AI Follow Us Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. Want to sponsor this newsletter? [Get in touch here](. You received this message because you are subscribed to Bloomberg's Tech Daily newsletter. If a friend forwarded you this message, [sign up here]( to get it in your inbox. [Unsubscribe]( [Bloomberg.com]( [Contact Us]( Bloomberg L.P. 731 Lexington Avenue, New York, NY 10022 [Ads Powered By Liveintent]( [Ad Choices](