How wary are other countries of Temu?

Faced with Temu's influx of cheap goods, Indonesia imposed a ban, Thailand increased taxes, and Europe and America planned to tighten regulations on operations and imports.

In the first half of this year, the total gross merchandise value (GMV) on this platform reached $20 billion, surpassing the 2023 figure ($18 billion). Temu has replaced eBay as the second most visited e-commerce website in the world , with 684.4 million global visits by August 2024 (Amazon still holds the lead). According to e-commerce data firm ECDB, being the second most visited doesn't mean they are the second largest retailer – currently ranked 25th globally – but it demonstrates a level of popularity that is not easily achieved internationally.

Temu's success stems from applying the experience of its Chinese domestic counterpart, Pinduoduo. They utilize high-discount referral programs on social media (also known as affiliate marketing), coupon giveaways, and short-term promotions. Their factory-direct pricing model helps them attract a user base seeking affordable products.

Growing rapidly at just two years old, Temu not only prompted strong bans in Indonesia but also raised concerns in many other markets. Even in Southeast Asia, just one month after its arrival... Thailand, Temu faces new policy.

Accordingly, starting in July, the country will impose a 7% value-added tax (VAT) on all imported packages valued under 1,500 baht (US$42), effective until the end of December. Next year, the new law will allow tax authorities to continue collecting VAT on such products. Previously, packages below this threshold were tax-exempt.

Not stopping there, the newspaper The Nation Thailand Reports indicate that many consumers and businesses are also calling for a ban on Temu products, fearing that the influx of cheap products could devastate the supply chain and the country's competitiveness. Bangkok Post The report stated that in September, the government had instructed relevant agencies to ensure that Temu complied with local laws and paid taxes appropriately.

The West is also seeking to tighten Temu's controls amid concerns about cheap and low-quality goods. In Germany , in September, the German Retailers Association (HDE) lobbied the government to "ensure fair competition for all market participants." They argued that customs authorities lacked the capacity to verify whether products complied with European Union (EU) regulations.

The Social Democratic Party (SPD), Germany's ruling party, is calling for a significant expansion of customs controls and the removal of the 150 euro duty-free limit. Critics argue that current customs regulations allow Temu and Shein to sell their goods at lower prices than competitors and avoid customs checks.

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

The German government says it is drafting new regulations to ensure that discount retailers from China, such as Temu and Shein, comply with standards on product safety, environmental protection, consumer rights, as well as customs and tax laws. Capital According to reports, in recent months the German Ministry of Economy has held discussions on this issue with the German federal states, the European Commission, and the European Parliament.

At the level In 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 VLOP.

On October 11th, the European Commission (EC) announced that it had requested Temu to provide information on the measures the platform is taking to prevent the sale of illegal products, under the Digital Services Act (DSA). The EC set a deadline of October 21st for Temu to provide the requested information. "Based on its assessment of Temu's response, the Commission will decide on the next steps," the EC statement said.

According to the EC, 2 billion parcels with a declared value of less than 150 euros entered the region last year, representing "a huge volume of e-commerce that is challenging the limits of customs." Le Monde , Shein, Temu, and AliExpress ship packages "at unbeatable prices" directly from the manufacturer to the customer without intermediaries. Therefore, initiatives against the minimum value threshold for tax exemption, known as "de minimis," are thriving.

In America, Temu also faces the possibility of changes to de minimis regulations, which currently allow exemptions from duties and inspections for imported goods valued under $800. According to the White House, the regulation has created loopholes that harm American workers, retailers, and manufacturers, making it more difficult for officials to determine if the goods are legal and comply with health, safety, intellectual property, and consumer protection regulations.

US Homeland Security Secretary Alejandro Mayorkas acknowledged that it is impossible to inspect the 4 million small packages entering the US each day under the duty-free rule, because the rule is built "on the erroneous assumption that low value means low risk."

The U.S. Customs and Border Protection (CBP) says China is currently the largest source of small packages. 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 the value is under $800.

The American Manufacturing Alliance (AAM) – a policy advocacy organization for manufacturers – says de minimis unfairly favors other importers by making them pay the tariffs. "It also means the U.S. is tacitly supporting Shein's success, harming domestic manufacturers and workers," the AAM report stated.

With the slogan "shop like a billionaire," a Temu spokesperson said in a statement that their mission is to provide consumers with more choices of quality products at affordable prices. "We achieve this through an efficient business model that eliminates unnecessary intermediaries, passing savings directly to customers. Temu's growth does not depend on de minimis," the spokesperson said.

Source