“No fair competition”
Cheap Chinese marketplaces are causing anger
February 8, 2024, 6:43 a.m
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Temu is causing a stir with mini prices, discount offers and sometimes bizarre products. This is well received by consumers, but not so much by the competition. Especially because the Chinese online retailer is hardly controlled. Now politicians should take action.
Trade experts and associations are calling for stricter action against Chinese low-cost marketplaces like Temu. “Neither the European nor the German legislature are in a position to fully enforce their regulations and laws against Chinese companies,” said the deputy general manager of the German Trade Association (HDE), Stephan Tromp. This creates distortions of competition.
According to the trade association, this also applies to the German supply chain law. The regulation is intended to guarantee compliance with human rights among suppliers and has also applied since January to companies with at least 1,000 employees in Germany. “The responsible federal authority is by no means lifting a finger to enforce the requirements for Chinese companies – which also sell to end customers and are therefore in direct competition with German dealers,” said Tromp.
Kai Hudetz from the Institute for Trade Research (IFH) also believes stronger government regulation is necessary. “It is not fair competition, we need more transparency. Politicians must take action and, in particular, enforce labeling requirements,” said the IFH managing director. The same rules and standards as European providers should apply to providers from the Far East. That is a question of fairness. At the same time, he sees consumers as having a responsibility. “From the prices, everyone can calculate how sustainably the products have been manufactured and transported and how good the quality can be.”
The e-commerce association BEVH is also calling for a tougher approach. “If companies behave unfairly on the market, then this must be stopped,” said BEVH deputy managing director Martin Groß-Albenhausen. There are strict requirements regarding product safety, for example. The question is why these rules cannot be enforced.
Trade association calls for more market surveillance
According to HDE, the flood of parcels from China is a Europe-wide problem for which there must be a European solution. For example, many packages arrive at the logistics center at Brussels Airport. “And once the products are in Europe, then they have more or less free rein. We have to protect our internal market,” said Tromp. “If a market is flooded with unsafe products, there is danger.”
Trading platforms like Temu do not therefore have to be banned. “If everyone has to adhere to the same rules, competition takes place for the benefit of the consumer. Then the better solution wins,” said Tromp. But if such platforms could make things easier because politicians and authorities don’t control them so closely, that would be that unfair.
The HDE is therefore calling for customs, which is responsible for parcel handling, to be strengthened. “Customs is simply overwhelmed by the sheer volume,” said Tromp, who is also an expert in digitalization at the HDE. One starting point could be a digital platform on which every shipment must be registered. Packages from retailers who did not adhere to the rules could be sorted out more easily and quickly. In addition, market surveillance must take action on a large scale: “They are currently taking almost no samples or trying to prosecute Chinese traders on such platforms.”
Temu recently caused a stir with mini prices, discount offers of up to 90 percent and sometimes bizarre products. The Chinese platform has established itself surprisingly quickly on the German market. One in four people between 16 and 65 have bought there in the past six years, according to a survey by the market research company Appinio. Temu is in fourth place in the rankings, just behind Otto. According to the web analysis company Similarweb, Temu even takes first place in the ranking of the most downloaded shopping apps in Germany in 2023.
The company does not act as a seller itself, but only makes its marketplace available to traders as a platform. The company behind Temu is PDD Holdings. PDD is known in China for the Pinduoduo app, one of the country’s fastest-growing e-commerce platforms. Since 2022, PDD has also been expanding abroad.
Temu invests incredible money in online marketing
Trade expert Hudetz has an explanation for this. “Temu is Google’s largest customer in the world. They pump incredible money into online marketing,” he said. This is currently an unprofitable business – especially since predominantly cheap, low-margin products are being sold. But can the Chinese platform be successful in the long term? “We must not underestimate Temu’s persistence. They have deep pockets and are able to invest in the market for the long term,” says Hudetz. However, many consumers are skeptical about online providers like Temu. In an IFH survey, 64 percent do not expect that marketplaces with goods from Asia will be able to displace established companies such as Amazon or E-Bay.
Temu’s success is notable in other respects. Online shopping is firmly anchored in Germans’ everyday lives. But things haven’t been going well for the industry lately. According to the industry association, gross sales in German e-commerce fell by 11.8 percent in 2023. Online retailers even remained 14.7 percent below the previous year’s result.
The consumer advice center warns when dealing with Temu, She has published tips on her website. Consumers should inform themselves about the applicable customs regulations before purchasing if they order from retailers outside the EU. “Otherwise you may incur additional taxes and customs fees,” it said. Customers should pay when they have received the goods and are satisfied – not in advance.
For electrical appliances, it is recommended to look for approved CE marks. The experts also point out the bad experiences that many Temu customers reported. According to the information, poor product quality, shipments not received and customer service that is difficult to reach are often criticized.