How countries are wary of Temu

Faced with the storm of cheap Temu goods, Indonesia imposed a ban, Thailand increased taxes, and Europe and the US planned to tighten regulations on operations and imports.

In the first half of this year, the total transaction value (GMV) on this platform reached 20 billion USD, surpassing 2023 (18 billion USD). Temu has replaced eBay to become the second most visited e-commerce website in the world , with 684.4 million global visits in August 2024 (Amazon is still in the lead). E-commerce data firm ECDB said that the second most visited does not mean they are the second largest retailer - currently ranked 25th in the world - but proves that the level of popularity is not easy to achieve at the international level.

Temu's "whirlwind" was achieved by applying the experience of the Chinese domestic version, Pinduoduo. Accordingly, they use referrals to give high discounts on social networks (also known as affiliate marketing), spin-to-win coupon games and short-term promotions. The low-price factory sales model helps them attract users looking for affordable products.

Growing strongly at just 2 years old, Temu not only caused Indonesia to ban it but also made many other markets wary. Right in Southeast Asia, one month after entering Thailand, Temu faces new policy.

Accordingly, from July, the country imposed a 7% value-added tax (VAT) on all imported packages priced under 1,500 baht ($42), effective until the end of December. Next year, the new law will allow tax authorities to continue collecting VAT on those products. Previously, packages below this threshold were exempted.

Not stopping there, the paper The Nation Thailand Many consumers and businesses have also called for a ban on Temu, fearing that the influx of cheap products could wreak havoc on the country's supply chain and competitiveness. Bangkok Post The government said in September it had asked relevant agencies to ensure that Temu complied with local laws and paid appropriate taxes.

The West also sought to tighten Temu's operations amid concerns about cheap and poor quality goods. In Germany , in September, the Retailers' Association (HDE) lobbied the government to "ensure fair competition for all market players". They argued that customs authorities lack the capacity to check whether products comply with European Union (EU) regulations.

Germany's ruling party, the Social Democrats (SPD), has called for a major expansion of customs controls and the removal of the 150 euro duty-free limit. Critics say current customs regulations allow Temu and Shein to undercut their rivals and avoid customs checks.

"Many wholesale and retail companies are very concerned about unfair competition from China, which distorts competition in trade and poses a serious threat to the local economy ," the SPD parliamentary group said.

The German government says it is drafting new regulations to ensure low-cost Chinese retailers such as Temu and Shein comply with standards on product safety, environmental protection, consumer rights, as well as customs and tax laws. Magazine Capital The German Economy Ministry has held discussions on the issue with Germany's federal states, the European Commission and the European Parliament in recent months, the ministry said.

At the level Europe, in May, the European Commission (EC) announced that Temu would have to comply with stricter EU online content regulations after the platform reached more than 45 million active users, known as VLOPs.

On October 11, the European Commission (EC) said it had sent a request to Temu for information on the measures it is taking to prevent the sale of illegal products, under the Digital Services Act (DSA). The EC has given Temu until October 21 to provide the requested information. "Based on the assessment of Temu's response, the Commission will decide on the next steps," the EC said in a statement.

According to the EC, 2 billion parcels with a declared value of less than 150 euros were imported into the region last year, a "huge volume of e-commerce that is testing customs limits". Le Monde , Shein, Temu and AliExpress ship packages “at unbeatable prices” directly from the factory to the customer without intermediaries. As a result, initiatives against the minimum value threshold for duty-free, known as “de minimis”, are thriving.

In America, Temu also faces the possibility of changing the de minimis rule, which allows duty and inspection exemptions for imported packages valued at less than $800. The White House says the rule creates loopholes that hurt American workers, retailers, and manufacturers, and makes it more difficult for officials to verify that the contents are legitimate and comply with health, safety, intellectual property, and consumer protection regulations.

US Homeland Security Secretary Alejandro Mayorkas admitted that it is impossible to inspect the 4 million small packages entering the US every day under duty-free regulations because the regulations are built "on the false assumption that low value equals low risk."

China is now the largest source of small packages, according to the U.S. Customs and Border Protection (CBP). The Biden administration argues that instead of importing large shipments, Shein and Temu ship individual packages directly to buyers, meaning they can avoid import duties because they are valued at less than $800.

The Alliance for American Manufacturing (AAM), an advocacy group for manufacturers, said de minimis unfairly penalizes other importers by forcing them to pay the tariffs. "It also means the United States is implicitly subsidizing Shein's success at the expense of domestic manufacturers and workers," the AAM report said.

With the slogan “shop like a billionaire,” a Temu spokesperson said in a statement that its mission is to provide consumers with a wider choice of quality products at affordable prices. “We achieve this through an efficient business model that cuts out unnecessary middlemen and passes savings directly to customers. Temu’s growth is not dependent on de minimis,” the spokesperson said.

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