For decades, Chinese manufacturing has underpinned America’s apparel industry. But those once vital trade links are increasingly becoming a liability.

This week, US lawmakers queried whether some of the world’s largest clothing brands are complying with a 2022 ban on imports of products that could be linked to Xinjiang, where a substantial proportion of the world’s cotton is grown, and the Chinese government is accused of conducting a campaign of detention and forced labour against Uighur Muslims and other ethnic minorities.

Sportswear giants Nike and Adidas and Chinese-owned ultra-fast-fashion e-tailers Shein and Temu were all sent letters from Congress’s House Select Committee on the Chinese Communist Party asking for detailed information on the steps they’ve taken to ensure their supply chains are free from links to Uighur forced labour.

That wasn’t the only front where fashion was caught in the crosshairs this week. On Monday, a bipartisan group of US lawmakers called for the Securities and Exchange Commission to verify Shein does not use forced labour before allowing the company to go ahead with reported plans for a US IPO this year. US lawmakers have previously raised concerns that Shein and Temu are exploiting trade loopholes, violating intellectual property rights and exposing consumers to hazardous products.

Shein said it has no suppliers in the Xinjiang region and that it takes a zero-tolerance approach to forced labour. Most of its cotton comes from the US, India, Brazil and Australia, according to the company. Nike, Adidas and Temu did not respond to requests for comment.

The moves illustrate how fallout from the deteriorating political relationship between the two countries is expanding across trade and business. So far, concerns about data security have meant Chinese-owned tech giants have faced the biggest squeeze in the US — most recently with moves to ban TikTok. But Shein and Temu’s explosive growth in the American market and fashion’s extensive and opaque links to Chinese manufacturing have drawn the sector deeper into the fray.

Meanwhile in China — where the government has consistently denied the use of forced labour — many consumers are either unaware of Western reports on Xinjiang due to censorship, or don’t believe them because Beijing’s state-run media outlets deem them to be anti-China propaganda. The perception of bias has fuelled the market for domestic brands at the expense of international competitors, often stoked by Chinese officials and influential celebrities who have cut ties with “disrespectful” brands.

For its part, the Chinese government has cracked down on international companies involved in corporate due diligence, a service that has become increasingly critical for Western companies looking to continue working with Chinese supply chains.

A Risky Business

For fashion brands there is no neat way to guard against the shifting political currents.

Shein and PDD Holdings, which owns Temu, have sought to build more international profiles, shifting their headquarters to Singapore and Ireland respectively. Shein has also ratcheted up spending on lobbying in Washington and building out its international supply chain. But it remains the focus of heavy criticism and scrutiny. In March, an anonymous coalition known as “Shut Down Shein” launched a campaign against the company in DC and with the American public.

Many Western brands have already made moves to seek out new suppliers and invest in new risk management tools, from blockchain-based traceability platforms to DNA markers to identify the origination of materials like cotton. “Friend-shoring” — moving manufacturing to politically friendly countries — is gaining currency as a new industry buzzword.

But fashion’s supply chains are deeply entrenched in China and most brands have limited visibility over where raw materials like cotton come from. In a sign of just how complicated the challenge is, most of the apparel and footwear shipments held up in the second quarter under the US ban on imports from Xinjiang came from Vietnam, where a large volume of garments are sewn using Chinese cotton.

At the same time, major brands including Adidas and H&M are still fighting to regain their standing in China’s hugely important market after Western regulators’ initial crackdown on Xinjiang cotton prompted a consumer backlash.

It’s too soon to say how this all shakes out for the industry, but pressure is only likely to increase with US-China tensions continuing to rise and more Western markets considering moves that would tamp down on products seen to be linked to forced labour.

THE NEWS IN BRIEF

FASHION, BUSINESS AND THE ECONOMY

Hugo Boss lifts profit outlook after Q1 sales jump. The company expects its operating profit to rise between 10 percent and 20 percent to €370-400 million ($410-$443 million) in 2023, compared with the previously expected 5 percent to 12 percent growth.

UK’s Superdry plans to raise about $15 million through share sale. Struggling British fashion brand Superdry said on Tuesday that it planned to raise about £12 million ($14.97 million) through the sale of about 19.1 percent of its equity.

Zalando nears break even in quarter amid profitability push. The Berlin-based e-commerce platform reported an adjusted loss before interest and taxes of €700,000.

OTB Group acquires a majority stake in leather goods atelier Frassineti. The Italian fashion group announced Thursday that it has acquired a majority shareholder stake in Frassineti, a Florentine leather goods manufacturer that has been a longtime supplier to the OTB-owned Jil Sander brand.

Next keeps profit guidance after quarterly sales edge lower. British fashion retailer Next maintained its guidance for annual profit after reporting a smaller decline in first-quarter sales than it expected, saying it was too early in the year to change its outlook.

A Bulgari store in Paris was robbed for the second time in two years. A luxury jewellery store in Paris was robbed in broad daylight, and the thieves’ getaway was captured on video.

Pandora to slow down brand relaunch in China. Pandora sees China as a potential driver of future growth, but the world’s largest jewellery market is recovering slowly from strict Covid-19 curbs, which were dropped at the end of last year.

Smartwatches are no longer a threat to pricey Swiss timepieces, Morgan Stanley says. Sales of smartwatches, including Apple’s top-selling version, have plateaued and are no longer a significant threat to the pricier end of the Swiss watch industry, according to Morgan Stanley.

US retailers cut the most number of jobs in April. US retailers replaced technology firms in cutting the most number of jobs in April, as companies show little signs of easing their belt-tightening drive in an uncertain economy.

Adidas to launch Fear of God athletics collaboration in the second half of 2023. Chief executive Bjorn Gulden confirmed the release period of the long-awaited tie-up on an earnings call. The collaboration — which comprises apparel, lifestyle sneakers and basketball footwear — will be worn by certain Adidas athletes in the NBA.

Adidas takes a small step forward while mulling Yeezy options. Adidas AG has yet to decide on what to do with its mountain of unsold Yeezy sneakers, but new chief executive officer Bjorn Gulden said its turnaround is nonetheless off to a good start.

THE BUSINESS OF BEAUTY

Revlon emerges from bankruptcy after lender takeover. Revlon Inc said on Tuesday that it has emerged from bankruptcy after cutting more than $2.7 billion in debt and handing control of the beauty products company to its lenders.

Estée Lauder sinks after dour 2023 view on slow Asia travel retail. Estée Lauder Cos Inc on Wednesday forecasted a bigger drop in full-year sales and profit, disappointing Wall Street that was expecting better results on rebounding travel retail after Covid-19 restrictions eased globally and in China.

Coty extends CEO Sue Y. Nabi’s contract; eyes second listing in Paris. The beauty company behind brands including Rimmel and Kylie Cosmetics has seen its shares rally almost 60 percent in 12 months.

PEOPLE

Sephora US appoints new chief marketing officer. On Wednesday, Sephora US named Zena Srivatsa Arnold as the brand’s new chief marketing officer, according to a company spokesperson.

Halima Aden returns as Vogue Arabia cover star. The Somali-American supermodel, who became the first person to front a Vogue title wearing a hijab in 2017 and stepped away from modelling in 2020 — returned for the May 2023 issue.

OTB’s Jil Sander appoints Luca Lo Curzio as CEO. Luxury brand Jil Sander, owned by Italian fashion holding OTB Group, appoints Luca Lo Curzio as its new chief executive officer.

End. Clothing taps Lea Cranfield as chief buying and merchandising officer. The experienced merchandising executive was hired to drive the UK luxury-streetwear retailer’s product strategy and scale its womenswear business.

Valentin Yudashkin, Russian designer of dresses and dress uniforms, dies at 59. Valentin Yudashkin, a Russian fashion designer known not only for flamboyant evening gowns but also for redesigning Russia’s military uniforms, has died at the age of 59.

Soviet and Russian fashion icon Slava Zaitsev dead at 85. Vyacheslav “Slava” Zaitsev, the couturier behind world-famous Soviet fashion that was often adorned with colourful Russian folkloric motifs, died on Sunday at age 85.

MEDIA AND TECHNOLOGY

Alibaba’s global online commerce arm weighs US IPO. Alibaba Group Holding Ltd.’s international online shopping unit is exploring a US initial public offering as it weighs options to spur growth for the business that includes major e-commerce brands Lazada and AliExpress.

Shopify cuts jobs again, sells most of its logistics business to Flexport. Shopify Inc. shares surged after the Canadian e-commerce company cut jobs for the second time in 10 months and agreed to sell the majority of its logistics business to Flexport Inc. as it faces a challenging climb back from last year’s slump.

Adidas is bringing web3 into its confirmed app. Adidas has a new long-term deal with a web3 company to bring token-gating, which lets brands grant preferred access to drops, offers or events through NFTs, into its Confirmed app, where Adidas releases its most in-demand products.

Pinduoduo owner PDD moves headquarters to Ireland from China. The latest filings list Dublin as the company’s “principal executive offices.” Filings as recently as February show Shanghai as the listed address.

Compiled by Sarah Elson.