With the new policy coming, Temu’s low-price strategy may no longer work!

Since its launch in early September 2022, Temu has been on a roll and has now covered 79 countries and regions. Its rapid expansion has attracted widespread attention from the entire e-commerce community.

Recently, there is news that Temu has surpassed the old e-commerce platform eBay and has become the second most visited e-commerce website in the world. The latest data from Stocklytics also shows that its global downloads have exceeded 735 million times, and the downloads in August were close to 55 million times, ranking first in the e-commerce APP download list in many countries around the world where it has been launched.

As an emerging e-commerce platform, Temu has successfully carved out a niche in the overseas market only two years after its launch. However, as Temu's popularity has increased and the number of packages has surged, many countries have said that it has posed a certain threat to the survival of local companies, and even planned to introduce new policies to prevent its over-expansion.

The United States plans to adjust the tax-free threshold for small packages under $800

In recent years, low-cost platforms such as Temu have risen rapidly, and a large number of small packages have flowed into the market. Data from ShipMatrix (a parcel transportation consulting company) shows that in July this year alone, Temu and other platforms transported a total of 1.8 million packages per day in the United States, while at the end of last year, the number was only 1 million.

In this regard, the report released by the relevant US departments pointed out that in the past decade, the number of goods entering the United States using the minimum exemption policy has surged from about 140 million pieces per year to more than 1 billion pieces. The report also emphasized that most of these packages entering the US market come from platforms such as Temu. This phenomenon not only brings potential risks to American consumers, but is also likely to affect the interests of local businesses and workers. Some platforms even use the tax exemption policy to transport illegal or dangerous goods .

To address this phenomenon, relevant US departments said they will take measures to restrict the transportation of small amounts of unsafe and unfair trade goods, and pass relevant legislation this year to comprehensively reform the existing "minimum exemption" system .

According to the previous tariff policies of the United States, small packages with a total value of less than US$800 not only have a more convenient customs clearance process, but also do not need to pay tariffs and taxes, which provides a lot of convenience for low-price platforms including Temu.

According to the announcement released this time, the measures that the United States will take mainly include the following aspects :

1. Plan to formulate new regulations to limit the amount of duty-free imported goods and strengthen trade enforcement, that is, exclude products subject to "201 tariffs", "301 tariffs" and "232 tariffs" from the scope of application of the minimum exemption rules.

2. Take other actions to support U.S. textile and apparel manufacturers in response to so-called "unfair competition" from other e-commerce platforms, such as canceling the duty-free status of most textiles and apparel, as well as the duty-free status of products subject to anti-dumping or countervailing duty orders.

3. The relevant departments plan to issue a "Notice of Proposed Rulemaking" on the entry of low-value goods, strengthening information collection requirements to improve the regulatory transparency of customs clearance of small-value goods.

4. To prevent small shipments from circumventing safety standards, the Consumer Product Safety Commission ( CPSC) staff proposed a final rule requiring consumer product importers to submit an electronic Certificate of Compliance (CoC) to CBP and CPSC when their products enter the country.

Industry analysts predict that if the minimum exemption is cancelled, platforms such as Temu will face rising product costs, which will cause them to balance their revenue by raising product prices , which is likely to greatly reduce their low-price advantage.

However, Temu responded that the company's growth does not depend on the minimum exemption policy . They hope to provide consumers with diversified, reasonably priced high-quality products through an efficient business model, and promised to support legislative adjustments that are beneficial to consumers on the premise of fair policies.

The development of Temu and other platforms in Europe will also be subject to certain " restrictions "

Recently, the European country of Hungary is also planning to implement new policies to reduce the growing market influence of e-commerce platforms including Temu .

It is reported that due to the huge difference in commodity prices, a large number of Hungarians choose to buy groceries from neighboring countries. In addition, with the rise of foreign e-commerce platforms such as Temu in the past two years, more and more people like to shop on such platforms. Some consumers said that the products sold by Hungarian sellers are almost the same as those they bought on Temu, but the price is several times higher than Temu.

Data shows that in 2023, the amount of online shopping by Hungarian consumers on foreign websites using bank cards reached 188.8 billion forints (about 4.78 billion euros). Based on the growth rate in the first quarter of this year, this amount is expected to grow to 240 billion forints (about 6 billion euros) by the end of 2024.

The rapid development of e-commerce platforms such as Temu in the country has put increasing competitive pressure on local sellers, and most retailers have begun to feel dissatisfied with this phenomenon. In addition, Hungarian Minister of Economic Development Marton Nagy also expressed concerns about "consumers' increasing reliance on overseas shopping platforms" in an interview, and hinted at the possibility of intervention measures in the future .

However, industry insiders pointed out that even if platforms such as Temu may face tax increases in Hungary, the country is unlikely to completely stop their growth. Moreover, China is one of Hungary's largest trading partners, and it would be unwise to restrict the development of a platform just because it is successful in the country's market.

Outside Europe and the United States, Temu is still on the rise

It is worth mentioning that although Temu has encountered setbacks in markets such as the United States and Europe, its performance in markets such as the Middle East, Japan and South Korea has been particularly impressive in recent times.

According to the latest data reported by foreign media, the number of Temu app downloads worldwide has exceeded 735 million so far . In August, even though its download ranking in the Middle East app market fell, it still topped the non-game app download ranking in the region with more than 3.18 million downloads.

In addition, Temu's semi-hosted Japanese and Korean sites were officially launched in August. It is understood that in early 2023, Temu's full hosting was officially launched on the Japanese site. As of August this year, it has been online for more than a year. Data shows that among all the markets that have entered, Temu's Japanese site has the largest number of users. In the Korean market, Temu's monthly active users and total transaction volume are also firmly in the forefront among local e-commerce platforms.

It must be said that in most countries outside Europe and the United States, Temu's development speed is still showing a significant upward trend. In the future, no matter which country or region Temu shifts its focus to, if it wants to move to a higher level, it must find new breakthroughs beyond its low-price advantage , and also pay attention to product quality and the laws and regulations of various countries.