EU Commission finds Temu in breach of online platform rules
euronews.com
euronews.com
Funny incident our CEO just mentioned to me yesterday: She ordered stickers from a local shop without asking the price, and on delivery had to pay 200 CHF for 20 stickers so 10 CHF/sticker. Next time she ordered from temu and got them at 20 CHF for 200 stickers so 0.1 CHF/sticker.
At least to me it's clear this is plain and simple regulatory capture by inefficient european retailers. In supermarkets I have to pay 12 EUR for a bottle opener that I can get for 2 EUR on temu. Amazon.de for example launched free delivery to estonia and other small european countries only recently post rise of temu.
These actions by EU commision are vehemently anti-consumer and anti-business under the transparent guise of being pro-consumer and pro-business.
Would recommend Bill Gurly's talk about regulatory capture if anyone is interested https://www.youtube.com/watch?app=desktop&v=F9cO3-MLHOM
As someone living in the EU, I am happy that we have product safety regulations which are halfway reasonable. But as someone building hardware in the EU, I sure sometimes hope that I would be allowed to just skip all the environmental, safety, tax, and EMI rules. But that’s the price we have to pay so that we don’t accidentally get poisoned due to other people’s greed.
And that’s why, even though it negatively affects my business, I fully support those EU regulations.
Platforms like Temu allow you to buy essentially direct from China and to cut many middlemen.
In hardware you have state-of-the-art PCB and assembly providers in China, who don't "skip" anything compared to European ones. Of course you have bad apples, too.
So there is a balance between paying more for quality and subsidising inefficiency and middlemen.
Or was it your intention to point out that when Chinese companies follow all the rules, their price advantage mostly vanishes?
The opposite. When they follow all the rules their products are still 10x cheaper and end up sold here either directly through Amazon or perhaps just branded as a well-known European brand (especially for small appliances, many, many products are sourced from white label chinese suppliers). So effectively you end up paying 10x more just for the branding and middlemen.
This of course ignores the fact that European retailers often sell the same exact goods from the same Chinese factory, but at a 5-10x markup. And as said these goods are often same of better quality that what I would get from domestic retailers. In case of stickers the one from Temu were were of higher quality.
If EU was forcing Temu to abide by EU regulations on health and safety I would be all for it. But they are shutting down competition(change in customs rule on small packages etc) so our domestic retailers can stay inefficient and continue to bleed consumers.
Sadly, all of these certifications cost money. That means companies who actually did the certification are forced to charge more for the same quality level.
Also, Temu is heavily reliant on infrastructure which was paid for by the taxes paid by local companies. The trick how Temu can avoid paying is by lying on the customs forms and declaring business transactions as valueless gifts. I’m not sure I would call fraud prevention as “regulatory capture”.
Actually tested stuff costs money. Not a lot more but enough to push them down the ranks.
I'm not aware them labelling business transactions as gifts. As far as I know there has always been 150 euros duty-free threshold and I have been using it to order traditional clothes from India for more than 15 years now.
The packages I get from Temu are clearly marked as commercial.
Also, in my mind it's arguable if local retailers paid for postal infrastructure. However what in arguable in my mind is that esselunga/carrefour sell me a wine opener for 12 EUR that I can buy for 2 EUR on temu. So I think you should also blame our domestic retailers a fraction of what you blame chinese retailers for bleeding us dry of our hard earned money.
Because otherwise you’ve just said that Temu only works precisely because they don’t pay import customs like any local company would.
Most of it is just outrageous markup since there's no competition in europe(save again for 1€ mom and pop chinese shops).
Not to mention european retailers would get huge bulk discounts on the sticker price of 2€.
- Safety testing to ensure it complies with European laws.
- Liability. If a product causes harm to someone, they can sue you.
- Warranty returns, if a product breaks, you have to repair it or replace it.
- Other returns, at least in the EU you can return a product bought online within two weeks, no questions asked. This should not be underestimated, e.g. for European online clothing stores, this is a significant chunk of their orders. People order three pairs of shoes, try them on and return the pairs that they don't want to keep. Best case, the product needs to be inspected by a (paid) human, worst case they have to trash it.
Temu does exactly none of that.
The reason we have these laws are: companies try to maximize their profits. Getting your house burnt down, your kid lead-poisoned, or getting a broken product without any course for replacement just sucks. So we make companies responsible for what they put on the market. Temu makes money by skipping all of that and externalizing the cost.
I'm not against forcing Temu to follow EU regulations. I'm against this trumpian push for protectionism and changing of custom rules or straight-out ban under the guise of health and safety.
> Temu does exactly none of that.
I would say it's arguable since Temu also has returns and often european retailers are selling same exact goods from same factory.
However assuming you are correct, in you mind does it justify a 10 eur markup on a 2 eur wine-opener by esselunga?
It would serve our interests if we redirect a fraction of this outrage on temu/shein on our domestic inefficient retailers since it would motivate them to improve their own logistics and improve supply chain efficiency.
2€ goods (obviously)
+ 0.12€ duty HS 76151010 aluminum-based kitchen household items
+ 0.38€ import VAT
+ 12.50€ processing fee
=> price of 14.94€ and I make 0 profit
The problem in my opinion is not that Temu is paying too low an import tax rate, the problem is that Temu is for many parcels completely circumventing the customs system, thereby incurring costs but not paying their fare share.
Now I could try to import a 1m^3 box with 1000 wine openers, in which case the economics get better:
2000€ goods (obviously)
+ 120€ duty
+ 38€ VAT
+ 45€ processing fee
=> imported price of 2.20€ each
But now I need to warehouse those 1000 items in Germany and re-package them into local parcels for each customer
+2€ packaging material
+4€ postage for local parcel
=> now I can sell at 8.20€ and if I have 0 returns, 0 warranty cases and 0 issues, I'll barely break even.
Calculating in that I might have to deal with 10% returns, I need to charge 9€ per piece. And here's the kicker: If Temu would legally pay customs and deal with warranty and returns accoring to German law, they, too, would arrive at a similar price.
=> The Temu price only works because they deliberately break the law.
> But now I need to warehouse those 1000 items in Germany and re-package them into local parcels for each customer
Yes, it would be infeasible to ship such a low value good. Even on Temu I have to order a minimum of 29€. If you account for that, you should be able to see how a 10€ markup by esselunga/carrefour on imported price of 2.2€ is outrageous and reeks of lack of competition.
> Calculating in that I might have to deal with 10% returns, I need to charge 9€ per piece. And here's the kicker: If Temu would legally pay customs and deal with warranty and returns accoring to German law, they, too, would arrive at a similar price.
Temu now pays customs since the 150€ customs exemption has been gone for years now, and more importantly also the same VAT as your domestic retailer! So the 2€ price for the wine-opener I gave you includes customs and VAT.
For example my order of a few months ago of 38€ included a VAT of 6,09€
I hope you can see my point now that all this outrage against Temu/Shein is based on trumpian style misinformation about VAT and customs and a general "chinese bad, temu bad, we good" attitude which I personally find defeatist and embarrassing.
If we were to spend a fraction of this outrage on how bad our logistics and supply chains are for domestic producers(specially in DE: I used to work in retail dealing with EDI systems of EDEKA/REWE and domestic suppliers) we would be doing some thing productive.
Not to mention things like regulating/fining anti-competitive behaviour by GS1 and others.
Do you fundamentally understand why the local suppliers have to mark it up? That the EU retailer has to pay their people a minimum wage, with taxes. And those taxes pay for all the laws, courts, infrastructure, armies that make your life possible?
Temu is taking advantage of old shipping laws/agreement which make it cheaper to ship from China, tax free, than to ship locally. Your local supplier is in fact, in a tiny part, subsidizing Temu to send those packages.
They don't pay pensions, or worker safety. They don't have to make goods safely and risk death or permanent maiming with their products or their manufacturing processes.
So in essence, you're basically exploiting your local shippers and foreign workers for cheap goods. It's you, albeit in a tiny part, who exploits them just as much as Temu.
Yes, I think we all don't really consider it, but that's what's actually happening.
The law's actually about to change in the EU. Potentially these cheap parcels are about to have a flat fee of 2.25 EUR added and no longer be exempt from duty, so you might soon start seeing the true cost of those goods soon that everyone else was paying for you.
https://www.reuters.com/business/retail-consumer/eu-eyes-2-e...
Due to the complexity of real world systems, parasites appear. You've been supporting one of those parasites with your purchases. That's not a conscious choice on your part, I get it. We can't go through life and see all the little parasites and injustices the world and its complex systems make and stay sane.
Instead of raising doubts about my character, it would be wise to consider my argument intellectually and see how you can justify a 10 eur markup on a 2 eur wine opener.
You're not advocating for consumers, you're advocating for a parasitic company that's subsidising your junk purchases using other people's tax money.
It's entirely possible for Temu to comply here, but it would mean losing a lot of their competitive edge, because that edge has essentially been regulatory arbitrage (i.e. breaking the rules because they could get away with it).
The same exact goods, or the same design made by the extra shift in the same factory and at lowest cost? EU companies will usually care about not being sued and not getting too many returns. Temu rando sellers care about items moved, regardless whether they work or not - corners can be cut.
The rules are not about where the goods are produced, they are about whether or not the goods are safe.
> If EU was forcing Temu to abide by EU regulations on health and safety I would be all for it. But they are shutting down competition(change in customs rule on small packages etc) so our domestic retailers can stay inefficient and continue to bleed consumers.
Forcing Temu to abide by the regulations is exactly what the EU is doing here.
If it was solely about shutting down competition, there would surely be a handful of European shops selling all kinds of goods legal or not, just like Temu.
That's not true for a pacemaker or a jetliner, which will both need somebody else to certify them before they can be sold for purpose, but it is true if you make most ordinary "hardware".
The rationale is that most people don't want to make shoddy garbage and so they actually want to know what's expected of them and comply, and those who are maybe less than honest can be caught by the usual processes - after the fact admittedly but now they're guilty not of some hard to prove negligence or whatever but of specifically selling goods which wrongly claimed to meet the requirements.
My mother used to (decades ago) make stuffed animals for kids. Those needed E marks. One day a mother complained that her child had been injured by a toy, investigators show up, take similar animals for testing and... they're fine because of course they're fine mum had been following the EU self-certification process, testing materials, using proper tools etc. and so she knew it was done properly albeit in this particular case that wasn't enough - without any certification framework my guess is that's a nasty lawsuit and almost nothing she can do to defend herself.
That means local companies are forced to spend money to avoid product issues. But Chinese companies can get away with selling known faulty goods.
The reality is that it isn't just a Temu problem, "free trade" with countries that do not have the same rules is necessarily imbalanced. It seems crazy to me that we impose very stringent rules inside the EU for many things and then allow anyone to import stuff from a faraway country that doesn't have to follow those rules.
China has been cheating by definition for many years now and it's just now that people are reacting because it's now clear we have exported all the value creation process thanks to a lack of protection for inside actors...
Importers are also bound to the certification rules. For example when I buy the weird canned beverage from the Chinese restaurant in the middle of campus the can itself is of course intended for sale only in China so it's full of typical Chinese tropes - but the rules say you can't sell this if it doesn't obey rules so the importer sticks the minimum amount of extra info, in English, to every single can.
This reminds me of Americans thinking exporters will pay their import tariffs. No, your rules only apply to your businesses, you might force foreign businesses to lower prices so as to remain competitive, but, you might just not.
Don't be so naive. There's a reason why the term snake-oil salesman entered the common vocabulary. If there's money to be made, you'll find plenty of hucksters and grifters trying to make a quick buck without regard for any potential damage they cause. And most of the time they get away with it, even become president.
It's easy to undersell the domestic market if you completely ignore all of the regulation that's applicable to literally any store located within the market.
However their actions till now have been about shutting down competition(changing custom rules on international packages).
> It's easy to undersell the domestic market if you completely ignore all of the regulation that's applicable to literally any store located within the market.
No credit to Chinese for running a efficient supply chain operation?
When I started asking sellers to correctly fill out the customs form with my business as the intended recipient and my company’s tax ID, I got banned from Temu and BangGood.
I'm all for forcing Temu and other Chinese retailers following our regulations if they want to sell in Europe.
For other stuff, well, it's probably hit or miss
This another one of those allegations where muh PRC subsidies makes no sense, especially since we're 5 years past UPU reforms... as in PRC companies haven't had preferential postage rates for years. They're just good at logistics now... bulk ship via air / preloading local ware houses then have local shippers hand last mile to keep per item shipping low. TEMU/Ali still has pretty healthy markup, like 100-200+% vs domestic. That's basically enough for margins and offset air shipping when dealing with trinkets. Order any big item and shipping price explodes, proportional to weight. Buying straight from PRC is cheap because you're not paying multiple middle men for same item. Sometimes middlemen is worth it, i.e. Amazon where you pay 10 dollars from transhippers vs 7 dollars directly from PRC vs 20 dollars from retailer because Amazon refund policy worth it small premium.
Everything has a cost, that cost usually goes far beyond the displayed $$$.
> Amazon.de for example launched free delivery to estonia and other small european countries only recently post rise of temu.
Is that supposed to be a good thing ? Both are killing local businesses by selling at loss because they're playing the long game. Life has more to offer than amazon prime and temu's gadgets
Answer would be because we shielded our firms from foreign competition by putting in place such anti-competitive policies. Our firms had no incentive to be efficient since they had a captive market for half a billion consumers they could bleed dry.
Concrete example for this would automobiles and VW v/s BYD/Xiomi in particular.
> Our firms had no incentive to be efficient since they had a captive market
Efficient compared to what ? Chinese working conditions ? Good luck lmao
If slave labor, 1950s style working hours, state controlled economy and international dumping is what you want the EU to compete with one to one we're dead
Isn't it nice, you'll be able to afford a meal per day and enough to maybe buy a sleeping bag so you can enjoy the under bridges better.
In most of my jobs I have had team members based out of eastern Europe, Ex-USSR, India, Israel, nomads from SEA etc.
And still pre-AI most people in our industry did amazingly well despite these cost of living and wage differences since often than not they are also motivated enough to dedicate over 70h+ to our jobs when required(for me this week will end up being a 70h week).
So unfortunately I can't support our inefficient domestic middleman retailers push to block foreign competition so they can bleed us dry by selling 2eur wine opener at outrageous 5x markup.
(Switzerland isn't even in the EU, it's just landlocked by it)
IANAL, but EU laws puts the responsibility of damage on who manufactures, manufactures parts, and who imports the product [2]. This means if you are an EU company, even if you produce in China, you are responsible when kids get lead poisoning or a house burns down when your electronics didn't obey safety margins. Making safe products is more expensive, it requires proper design, not skimping on components, and testing the products in a lab. Temu/Ali/etc. sellers do not have to bear any responsibility, because they typically do not have any offices in the EU, so how are you even going to sue them? So, they don't have the same cost because they can skimp on all the safety requirements.
Second, designing products requires human labor. For instance, I am quite familiar (through contacts) with the ergonomic keyboard market. Designing an ergonomic keyboard can require years of iteration. Multiply by the salary of the keyboard designer and you can understand why you can not sell such a product just above cost price. However, on Ali, etc. you can buy ergonomic keyboards that are either license violations of open designs (that typically have a CC license that does not allow commercial use) or outright copies of non-open designs.
It's easy to provide something at cut-throat prices when you are stealing the bulk of the work.
And then we are not even talking about the absolute environmental waste of sending individual packages to customers in place of bulk shipping.
EU is absolutely right to regulate this. Temu etc. are making money by externalizing most of the cost (monetary, environmental, safety, etc.). Make Temu etc. open an EU office and require them to ship from that office. In that way they have to comply to European safety regulations and can be held accountable if some kid dies, or a house burns down from unsafe electronics.
Before anyone comes with the tired sinophobia argument: I am not criticizing China. There are many Chinese companies that do business in the EU and do not try to dodge local regulations.
[1] https://www.nvwa.nl/nieuws-en-media/nieuws/2025/01/16/nederl...
[2] https://europa.eu/youreurope/business/dealing-with-customers...
Your tiny-batch stickers reflect of local wage levels more than EU regulation. VAT will be part of it too.
But on safety compliance, the electrical crap that Temu (et al) rain on our countries is a fire hazard. It shouldn't be controversial that goods that don't meet EU standards be barred.
When sales are direct B2C, the EU can't retroactively (or prospectively) stop them, nor recall sent units, not in the way they can when a container rocks up with tens of thousands of units that turn out to be dodgy.
I don't know what the answer is. Making Temu (et al) liable for goods' compliance —in the way importers are— seems like a sensible start.
In my mind this 10 eur markup on this simple cheap good is directly related to lack of competition in retail in europe.
> I don't know what the answer is. Making Temu (et al) liable for goods' compliance —in the way importers are— seems like a sensible start.
Sure! However the way things are moving, it'll end with Temu/Shein being banned in europe in a few months.
> Temu doesn't pay VAT and/or other taxes etc
Many of their orders are below the threshold for import duties. Some come with "gift" declarations which shift the VAT and duty thresholds. Direct sales skirt the tax laws. Again, I'd be shocked if all the tax they collect was declared and paid. The EU would have no way to verify.
Yes, and they are sponsored^Wlobbied by Amazon because it eats Amazon's core business.
Despite the fact that the US is doing the exact same thing to other economies, especially China.
China has great networking equipment, but it can't be sold in the US. China has great smartphone brands, those can't be sold, either. Chinese electric cars, same.
China obviously is the OG regarding impeding or outright blocking competition with the 51% joint ventures.
Of course it's also protectionism, everyone is doing it.
However where I hear crickets is the actual public benefit/moral angle:
Just because foreign companies that absolutely dominate these markets are the ones being fined the most, does that mean that the ideas behind the fines are wrong?
Working for US companies operating in Europe, I would say that they (and probably Chinese companies - from what I hear) are natural targets: "move fast and break things", everything is US derived in spirit and in action and Europe doesn't work like that (the US is basically: you're smart and/or privileged and you get a decent or great life, if you're neither of those things, go live under a bridge).
Can't both do a lot of gray area stuff to grow unicorns and also not expect to be punished for breaking lots of social eggs.
How so?
I don't see it succeeding.
It's hard to explain just how much shit these digital platforms pull when serving a small market they don't care much about. People are rightfully pissed. It's seeped deeply into the public sphere the last ~8 years. Much more than I imagined possible even 2-3 years ago. Doubly so with the recent merging of the Republican party and technology leaders.
While Temu is in a class of its own - it's obvious that hyperscaling and postponing QC, moderation and compliance with a very American approach to safe harbour laws will not continue being the premier way to skirt laws for much longer.
That's what a clever law looks like, it bundles things together.
So now if someone complains about threats to free speech they can be told "Oh so you prefer toxic products, then? Think of the children!" in the same way you are doing.
Content which is not directly illegal is covered by the voluntary code of conduct on disinformation [1]. If you can point out to me a provision which allows the governments to force platforms to remove content which is not explicitly illegal I'll be very impressed. Because it ain't there.
It does say that algorithms should be tweaked to not spread "damaging disinformation" - e.g. reduce amplification of it. And it does say that these platforms shouldn't be allowing users who create disinformation to monetize their content like the good old Macedonian troll farms [2]
But in the end - there are no sanctions. These are guidelines. And if platforms consistently ignore these and it turns into a systemic harm then fines can start piling up. But never for a single piece of content - just a systemic malpractice.
Yes. It's a clever law because it doesn't give governments the power to remove content which is not illegal. But it does still force platforms to do something about their incentives they create for third-parties around content.
And no. Throwing the baby out with the bathwater and letting foreign companies self-regulate illegal content is frankly ludicrous considering their stellar track record of not giving a shit because it's the cheapest option.
[1] https://digital-strategy.ec.europa.eu/en/library/code-conduc...
[2] https://www.cambridge.org/core/journals/ps-political-science...
Someone's "misleading information" is someone else's political campaigning.
The EU commission is guilty of hypocrisy and doublespeak on this when it states that "the Code of Conduct aims to combat disinformation risks while fully upholding the freedom of speech" when those two things are obviously mutually exclusive.
I fully agree with you, by now no new company will grow that large using this American approach, because nowadays the German public will expect them to skirt the law and call them out on it immediately.
It's one thing to protect consumers, it's another to treat them like children by banning everything.
Why is "gamification of shopping" banned? EU law is on a slippery slope because under the stated aim of protecting consumers what it is doing is treating us like children and banning anything that the benevolent Commission think is 'bad' for us. This can end very badly for our freedoms (it has started).
Now, I do agree with banning misleading practices and with enforcing information to consumers, but that's quite different: In a free society you make sure that people are informed and then you let them make their own decisions, you don't make those decisions on their behalf which implies that they can't be trusted to make the "correct" decision (with chilling ramifications for the democratic process).
If so, I'm curious why you think that any consumer wants the system to be gamed? And why freedom to game the system should be a right.
Obviously the term has nothing to with "gaming the system", which is an expression that essnetially means cheating.
You can go to a casino and play roulette or slots without being misled or cheated. That being the case you can definitely gamify shopping without misleading or cheating customers. If that's the case then people are adults and make their own decisions.
Temu is doing this because they gain from it. So if this were legal, then other sellers might be forced to do it too to remain competitive. Is this really a direction you want to go in?
Unless you are an organiziation the size of Temu, you either put up with their bullshit or you don't get to buy whatever it is you wanted to buy.
The way out here is using the power of the democratically elected state to put Temu in their place - using democracy to counteract capitalist abuse.
Or you remember that you have free will and that no-one is forcing you to use their app or to buy anything on it...
Also, this was about gamification, not unfair practices...
And yes, I have free will, but that doesn't help me against corporate might. Only the state does.
This is not what "unfair" means.
The EU wants to ban gamification because it sees it as addictive. So this is the nanny state that thinks people are children.
And of course, the state should do that. That's the whole point of a state - to use its power as a weapon of the people against capitalist abuses.
This kind of behavior is explicitly forbidden by market authorities.
I don't see any reason why we should allow it, or why consumers would be better off with this gamification.
This has nothing to do with freedom to do whatever you want, but everything with a seller which is doing everything it can to confuse buyers. A market needs rules. And we should not allow a seller to determine all the rules.