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From: Glenn Petersen1/3/2024 7:30:21 AM
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Behind Cheap Stuff From Shein and Temu: A Hard Bargain With Suppliers

Shopping apps throw a lifeline to Chinese exporters, but it is a trade-off

By Yoko Kubota, Raffaele Huang and Shen Lu
Wall Street Journal
Updated Jan. 3, 2024 12:03 am ET

SHENZHEN, China—E-commerce sellers Shein and Temu are offering a lifeline for small suppliers in China’s manufacturing hubs—but it isn’t always a straightforward win.

In recent years, thousands of Chinese factories and vendors have joined the supply chain for Shein and Temu, whose popularity has exploded in the U.S. with their offers of inexpensive made-in-China goods, from T-shirts and handbags to electronics and kitchen items.

The two platforms enable factories and vendors on the ground in China to reach vast new numbers of consumers across the world. Shein sells to more than 150 countries, while Temu sells to more than 40.

But it is a trade-off: Some suppliers that spoke with The Wall Street Journal said they were grappling with razor-thin profit margins and intense pressure to cut prices. Others said they were drowning in unsold inventory and were questioning whether dealing with Shein and Temu would be sustainable in the long run.

Electronics vendor Jason Xie previously sold gadgets such as smartphone screens from a stall in a Shenzhen electronics market to buyers from the U.S., Middle East, Southeast Asia and elsewhere. When those buyers stopped coming during the pandemic, Xie turned to online commerce, first selling on platforms including and Pinduoduo, Temu’s sibling platform in China. In May 2023, he accepted an invitation from Temu’s parent, PDD Holdings, to sell on Temu.

He was hoping to ride Temu’s popularity overseas, but a few months later, he was already questioning the sustainability of Temu’s approach. Intended to be a high-volume, low-margin business, its marketplace was crowded and its profit margins were smaller than on Amazon, Xie said.

While some of his goods have been hits, including a $12 wireless speaker that comes with an LED night light, others have been costly flops. At one point, Xie and his colleagues prepared 1,000 $3 smartphone bands in a variety of colors. With many similar items on the platform, they sold just a dozen or so.

Workers sewing clothes on a production floor of a Shein facility in Guangzhou, China. PHOTO: GILLES SABRIE FOR THE WALL STREET JOURNAL

There were other issues: Temu suppliers are responsible for many costs related to returns, and suppliers could also face penalties from Temu if consumers file complaints during returns, Xie said.

Temu said that its low-price strategy benefits consumers and that there are manufacturers that excel on the platform, having developed economies of scale.

It pointed to Zhejiang Maibo Industrial, a factory in Wuyi in eastern China, which for years has been making water bottles and tumblers for other retailers. It started selling its products under its own brand on Temu in March, getting a profit margin of 20% compared with 10% when selling for other brands.

Bowen Wang, the head of the factory, said Temu’s barrier to entry was low given that it handles shipping as well as marketing.

New supply-chain modelTemu and Shein have upended the e-commerce supply chain with their on-demand business model; they place orders to suppliers to be delivered in days, rely on real-time data to quickly analyze demand and replenish orders as needed. That cuts down on the need for storage and limits inventory risk.

In some cases, that risk is getting transferred to the suppliers.

Dongguan Michun Clothing, a maker of children’s apparel near Shenzhen, has been supplying Shein for about two years, but in recent months has essentially halted work with the platform, said Zhang Qingwei, the general manager of the factory.

A worker at Zhejiang Maibo Industrial, a factory in Wuyi that produces water bottles and tumblers. PHOTO: ZHEJIANG MAIBO INDUSTRIAL

When Zhang’s factory suggests products, Shein might express interest in purchasing a certain amount, possibly several hundred. But if the product doesn’t sell well, Shein only takes a small share, leaving Zhang’s factory to deal with the rest, but doesn’t let him sell the items on other platforms, he said.
Such scenarios have led Zhang’s factory to swim in Shein inventory, he said. “The risk is too great for the factory,” he said. Revenue from Shein at its peak accounted for some 10% of the factory’s overall revenue, but is now down to around 1%.

Shein said that its system gives suppliers insight into what customers want as well as capacity, inventory levels and demand.

Shein and Temu, which have been competing for suppliers, also increasingly target the same customers overseas.

China-founded Shein, which is now based in Singapore, soared to American fame first, becoming a fast-fashion juggernaut over the past eight years. PDD launched Temu a little over a year ago, which quickly put pressure on Shein. For most of 2023, Temu has been the second-most popular e-commerce app in the U.S. measured by monthly users, behind Amazon, according to estimates by SimilarWeb, a digital data and analytics company.

By July, Temu’s sales in the U.S. were bigger than Shein’s, data from Earnest Analytics show. In recent months, Shein has forayed beyond fashion into the marketplace model, allowing third-party merchants to sell a variety of goods, putting it into more direct competition with Temu.

Zhang Qingwei, the general manager of Dongguan Michun Clothing, checks its inventory. PHOTO: YOKO KUBOTA/THE WALL STREET JOURNAL

In the U.S., Shein and Temu each ship an estimated one million packages a day, according to parcel-shipping consultant ShipMatrix.

Shein, for its fashion business, works directly with factories and said it has about 5,400 suppliers, primarily in China. Temu didn’t disclose how many suppliers it has, but also said most are in China.

Six sellers told the Journal they have stopped doing business with Temu because of its strict pricing policies. Temu typically sets the lowest price offered by all suppliers as a benchmark, leaving sellers with tiny profit margins. Shein allows suppliers to set their price within a certain range.

One Temu seller said that if he doesn’t reduce prices to match those set by other suppliers, Temu wouldn’t allow him to replenish inventory in its warehouses, effectively cutting him out of doing business with the platform. The seller said he has decided to stop selling on Temu.

Others say Temu has helped them increase profits. Huang Yilun in Huizhou, a city near Shenzhen, has been making Christmas decorations for export for nearly a decade. Desperate for new channels after the pandemic, which nearly obliterated his business, he started selling on Temu in June. Of 10 samples he sent in, Temu accepted two and told him to drop the price another 20% on one of them.

Even so, he said he was still making better profits than before. For example, he had been selling a Santa Claus cloth decoration that cost him around 14 cents to make for around 40 cents to an exporter. On Temu, he could sell it for at least $1, more than tripling his profit.

But he is struggling to hire workers, whose wages have gone up. Meanwhile, Temu is asking for more price cuts for several items.

“Temu is an attractive platform for me, but pressure has started mounting,” Huang said.

Since Temu’s debut, many other platforms, including TikTok, Alibaba Group’s AliExpress and Shopee by
Tencent Holdings-backed Sea, have also leveraged the Chinese supply chain to give global shoppers more and cheaper options. Amazon also has attempted to revive and expand its global selling program, with Chinese vendors a major target.

Lex Green, visual merchandising coordinator for Shein, organizes items at a Shein pop-up inside Forever 21’s Times Square store in New York. PHOTO: ADRIENNE GRUNWALD FOR THE WALL STREET JOURNAL

As the market gets crowded, sellers are testing which platform can bring them the best sales and profits.

Shenzhen-based Bai Yu turned to e-commerce after getting laid off from a private tutoring school in 2021. A few months after she set up an Amazon store for the U.S. market, selling battery chargers for golf carts, Temu called.

She started selling a few hundred golf-cart battery chargers a month on Temu, more than she sold on Amazon, though prices on Temu were often as low as half those of the same charger on Amazon.

Soon, Temu asked her to trim prices further to match other sellers.

“I feel like I have been pushed ahead and I have no choice,” she said about her price cuts. She is now considering trying out TikTok’s new program to sell in the U.S., she said.

—Zhao Yueling contributed to this article.

Write to Yoko Kubota at, Raffaele Huang at and Shen Lu at

Copyright ©2024 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Behind Cheap Stuff From Shein and Temu: A Hard Bargain With Suppliers - WSJ

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To: Glenn Petersen who wrote (6748)1/3/2024 11:52:29 AM
From: Ron
   of 6761
Temu seems to have flooded online sites with ads lately.
No interest here in their products, at all.

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To: Ron who wrote (6749)1/3/2024 1:00:09 PM
From: Glenn Petersen
   of 6761
I have been overwhelmed with the same ads. When I see the Temu ads, I think of WISH.

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From: Ron2/3/2024 10:18:10 AM
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Disruptor was for hire: Called in 'Swatter' and bomb threats nationwide

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From: Ron2/4/2024 1:00:25 PM
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FBI: Chinese Hackers Are Targeting US Electricity and Water Supplies

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From: Glenn Petersen2/5/2024 6:59:41 PM
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Attacks in the metaverse are booming. Police are starting to pay attention.

A growing cohort of activists are urging police forces to grapple with sexual attacks in virtual reality, but prosecuting digital abuse could be tricky

By Naomi Nix
The Washington Post
Updated February 4, 2024 at 11:31 a.m. EST
Published February 4, 2024 at 7:00 a.m. EST

Though the attack took place in virtual reality, Nina Jane Patel was surprised to feel her real heart racing in her chest.

Three male figures surrounded her avatar in Horizon Venues, a virtual live events program created by Meta. They touched her avatar’s breasts and pressed their torsos rhythmically against her, telling her that she wanted it. A fourth took photos of the incident in the app.

“My physical body was responding,” said Patel, 45, a virtual reality researcher and consultant with the Zero Abuse Project, describing the 2021 attack. “I was very uncomfortable. Fight or flight mode kicked in.”

Meta declined to comment on the incident.

As virtual reality programs are booming, so are reports of attacks, harassment and sexual assault. Some activists argue these incidents should be treated as serious — even criminal — acts. And authorities are starting to pay attention.

This spring, under a grant from the U.S. Justice Department, the Zero Abuse Project will hold workshops to explain the metaverse and its dangers to state and local police. And last month, the international law enforcement group Interpol called on global police forces to develop protocols to address crimes committed in VR, including sexual assault.

“With its increasing use and the number of participants,” Interpol wrote in a report , “there is a need to define what constitutes crimes and harms in the Metaverse.”

Emerging science suggests that harassment in digital worlds can have a profound psychological impact similar to real-life attacks. But prosecuting virtual crimes would require a dramatic rewriting of legal precedent. Laws governing rape and sexual assault require evidence that a physical incident occurred. And while harassment statutes might technically apply, they often require multiple offenses and are tricky to prove.

Some urge caution in declaring these real crimes, despite genuine harms.

“People kill each other all the time in video games but we don’t call them murderers,” said Aya Gruber, a law professor at the University of Southern California who has studied rape laws and called jail a “blunt tool” for addressing online behavior.

Others say the situation is urgent and demands immediate protocols. Dan Barry, an investigations specialist at the Zero Abuse Project, set up a test profile mimicking a 13-year old girl on VRChat, a virtual reality program. Almost immediately, the girl’s avatar was greeted by male avatars, who made sexual comments and asked her to chat privately.

“That child could be [sexually] assaulted by [an] adult,” he said. “There are not a lot of controls in these spaces.”

These challenges arise as major technology companies are investing billions of dollars into virtual reality programs, aiming to transform them into a new computing platform. Meta CEO Mark Zuckerberg has said virtual and augmented reality powered devices will eventually replace mobile phones and some in-person communication. Apple’s virtual reality headset, Vision Pro, went on sale Friday.

Many of the earliest adopters of virtual reality came from the video game industry — a sector that has struggled with racism, sexism and harassment. These issues exploded into the public in the 2014 phenomenon known as “gamergate,” when internet trolls organized to harass women in gaming circles.

Experts say these issues have migrated to social VR apps, where users interact with each other in virtual bars, concerts and event spaces. One 2018 study found that 49 percent of women who regularly used VR reported experiencing at least one instance of sexual harassment.

For people who use VR harassment “is a growing concern,” said Clemson University professor Guo Freeman, author of a forthcoming study on harassment in the metaverse. “Some people actually told us they would quit” because of the abuse.

Experts say the immersive nature of virtual reality can make online attacks feel real. Researchers use the phrase “embodiment” to describe the intimate connection people feel with their digital avatar. Headsets from Apple and Meta with advanced audio and “eye-tracking” enhance this feeling, by making virtual experiences seem real.
“This type of immersive and embodied experience [makes] harassing behavior feel as realistic as in the physical world,” Freeman said. “It’s like my offline body is attacked because it feels so real. It’s like someone is touching me.”

Patel said that she logically knows her attack happened to a digital avatar, hearing the voices of her attackers in her ear made it feel like it was happening to her body.

While victims might suffer profound emotional impacts, it’s unlikely that law enforcement and courts will interpret these experiences similarly. Most legal definitions of rape require a physical sexual act to have occurred in order for prosecutors to pursue a case, said John Bandler, a lawyer specializing in cybersecurity and former assistant district attorney at the New York County District Attorney’s Office.

“It’s not a rape as defined in the criminal law,” Bandler said of attacks in virtual reality. “It’s not an act in the physical world.”

Experts said it might be possible to prosecute offenders under a lesser harassment charge. But those charges are often made when the perpetrator has committed multiple offenses over time, said Mary Anne Franks, a George Washington Law School professor.

“To rise to the level of something criminal, [a perpetrator] would have to have done something repeatedly — that is follow this person home or they show up at work the next day,” Franks said. “And online too, there would need to be more than just one incident, where someone has been aggressive.”

Franks added that law enforcement agencies have historically not always prioritized harassment cases in the physical world and might be even more reluctant to devote extensive resources to investigate virtual incidents.

“There’s a long standing view that these kinds of assaults — this kind of abuse — isn’t as real and not as serious,” she said.

Many caution that more research is needed to understand the impact of criminal or unethical behavior in VR before it’s criminalized.

Soon after her attack, Patel wrote about her experience on Medium and she was bombarded with emails telling her she was “stupid” and “ridiculous” to call her experience an assault.

“I had no intentions of being the woman who was sexually assaulted in the metaverse,” she said. “What my intention is is to share my story — this story, the story of many, in order to raise the alarm bells.”

Why Metaverse sexual assaults could be difficult to prosecute - The Washington Post

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From: Ron2/6/2024 5:54:53 PM
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Hackers joined millions of smart electronic toothbrushes together in a botnet, and attacked a Swiss
Company causing heavy damage

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To: Ron who wrote (6754)2/10/2024 2:59:59 PM
From: Ron
   of 6761
Turns out the hacked toothbrush story was false, an urban legend: An update from Wired:

How 3 Million Hacked Toothbrushes Became a Cyber Urban Legend

Hackers have, in the real world, caused blackouts, set fire to a steel mill, and released worms that took down medical record systems in hospitals across the US and the UK. So it hardly seems necessary to invent new nightmares about them taking over our toothbrushes.

Yet, when the Swiss newspaper Aargauer Zeitung published a story that cybercriminals had infected 3 million internet-connected toothbrushes with malware, then used them to launch a cyberattack that downed a website for four hours and caused millions of dollars in damage, the tale was somehow irresistible. This week, news outlets around the world picked up the story, which quoted the cybersecurity firm Fortinet as its source, spinning it out as the perfect illustration of how hackers can exploit the most mundane technology for epic malevolence. “This example, which seems like a Hollywood scenario, actually happened,” the Swiss newspaper wrote.

Except, of course, it didn’t. Cybersecurity professionals quickly started to point out that the story was unsupported by any evidence—and was somewhat absurd on its face. (Even the Mirai botnet, which knocked out its targets with record-breaking tsunamis of junk traffic and eventually broke a large fraction of the internet, infected only 650,000 internet-connected devices at its peak.)

Fortinet belatedly sought to correct the record, writing in public statements that “it appears that due to translations the narrative on this topic has been stretched to the point where hypothetical and actual scenarios are blurred.” But the Aargauer Zeitung pointed the finger back at Fortinet, noting in a follow-up story that Fortinet provided exact details of the dental doomsday it described as real, and that the company even reviewed the text of the article prior to publication. Regardless of who’s to blame, at least this cyber urban legend has inspired some solid meme content.

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From: Ron3/3/2024 10:53:19 AM
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Ransomware Georgia’s largest county is still repairing damage inflicted on its government offices by a cyberattack in January 2024.

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From: Ron3/5/2024 8:56:46 AM
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The ransomware attack targeting medical firm Change Healthcare has been one of the most disruptive in years, crippling pharmacies across the US—including those in hospitals—and leading to serious snags in the delivery of prescription drugs nationwide for 10 days and counting. Now, a dispute within the criminal underground has revealed a new development in that unfolding debacle: One of the partners of the hackers behind the attack points out that those hackers, a group known as AlphV or BlackCat, received a $22 million transaction that looks very much like a large ransom payment.

On March 1, a Bitcoin address connected to AlphV received 350 bitcoins in a single transaction, or close to $22 million based on exchange rates at the time. Then, two days later, someone describing themselves as an affiliate of AlphV—one of the hackers who work with the group to penetrate victim networks—posted to the cybercriminal underground forum RAMP that AlphV had cheated them out of their share of the Change Healthcare ransom, pointing to the publicly visible $22 million transaction on Bitcoin's blockchain as proof.

That suggests, according to Dmitry Smilyanets, the researcher for security firm Recorded Future who first spotted the post, that Change Healthcare has likely paid AlphV's ransom. “You can see the number of coins that landed there. You don’t see that kind of transaction so often,” Smilyanets says. “There’s proof of a large amount landing in the AlphV-controlled Bitcoin wallet. And this affiliate connects this address to the attack on Change Healthcare. So it’s likely that the victim paid the ransom.”

A spokesperson for Change Healthcare, which is owned by UnitedHealth Group, declined to answer whether it had paid a ransom to AlphV, telling WIRED only that “we are focused on the investigation right now.”

Both Recorded Future and TRM Labs, a blockchain analysis firm, connect the Bitcoin address that received the $22 million payment to the AlphV hackers. TRM Labs says it can link the address to payments from two other AlphV victims in January.

If Change Healthcare did pay a $22 million ransom, it would not only represent a huge payday for AlphV, but also a dangerous precedent for the health care industry, argues Brett Callow, a ransomware-focused researcher with security firm Emsisoft. Every ransomware payment, he says, both funds future attacks by the group responsible and suggests to other ransomware predators that they should try the same playbook—in this case, attacking health care services that patients depend on.

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