The European Union has launched an investigation into Temu, a Chinese online retailer, citing concerns over its business model and potential impact on the EU market. The probe focuses on Temu’s practices of exporting goods duty-free, splitting orders to stay under the threshold, and offering fake discounts.
The European Union (EU) has launched an investigation into the business model of Temu, a Chinese online retailer, citing concerns over its practices and potential impact on the EU market.
Background
Temu is owned by PDD Holdings, a US-listed company that also operates the e-commerce platform Pinduoduo in China. Temu first emerged in the United States in September 2022, claiming to give Americans greater access to Chinese products. Since then, it has experienced rapid growth globally.
Concerns and Allegations
The EU Commission investigation has raised several concerns and allegations against Temu:
-
Exporting products to Europe largely duty-free, exploiting a loophole under EU rules
-
Splitting larger orders into smaller packages to stay under the duty-free threshold of €150
-
Offering fake discounts to customers, publishing fake reviews, and having an addictive app design
Investigation and Potential Consequences
The investigation has given Temu until early December to offer remedies and make adjustments to its business model. If it fails to comply, the platform will face hefty fines.
Taxation Policy and Implications
A major issue not addressed by the EU probe is Temu’s practice of exporting goods to Europe largely duty-free. Taxation expert Roger Gothmann believes that this loophole is crucial to Temu’s success, allowing it to offer low prices that would be impossible without exploiting this threshold.
Closing the loophole could potentially slow down Temu’s growth in Europe. The CEO of Taxdoo suspects that Temu deliberately splits larger orders to stay under the duty-free threshold.
Relevance of the Article’s Content
The article discusses the rise of Temu as a major player in the e-commerce market, with thousands of items available at unbeatable prices. It also highlights concerns over the company’s practices and potential impact on the EU market.
