The U.S. Trade Commission is Changing It’s Hands: Pinduoduo and Temu are Enforcing Unfair Practices
Consumers have been skeptical of the quality of Temu’s offerings. The U.S. government accuses Temu of underpinning it’s business with unfair and unethical practices.
Pinduoduo changed its name last year to join Temu in being the parent company of both. The stock price of the company last week was $127.48, giving it a market value of $169.37 billion.
The app and the website of Pinduoduo have been on the list of “notorious markets for counterfeiters and piracy” for a long time.
The Atlantic’s Mull said last year that some of them will be similar and some of them will be the same sellers as at other retailers. “Others are going to be a little bit junkier. substandard materials might not always be accepted in the U.S. for safety standards.
A federal class action lawsuit was brought last year against Temu and its parent company for allegedly collecting user data beyond what is necessary for an online shopping app.
The Chinese-owned online discount marketplace is expanding at a breathtaking pace because of the Super Bowl ads.
“Regarding the compliance issue of products related to forced labor, we attach great importance to it,” the Temu representative told NPR. “Our current standards and practices are no different from those of major U.S. e-commerce platforms. The allegations in this regard are completely ungrounded.”
“Both Temu and Shein rely heavily on the de minimis exception to ship packages directly to U.S. consumers,” a congressional review found last year, “allowing them to provide less robust data” to Customs and Border Protection and avoid import duties.
The rule in question is called de minimis, a legal term for something too insignificant in value to bother imposing duties. The European Union has a threshold of 150 euros. The U.S. level used to be $200, but it rose to $800 in 2016 — among the highest in the world — when then-President Barack Obama signed the bipartisan Trade Facilitation and Trade Enforcement Act.
The U.S. Implications of a “Temu-Doubered” Food and Produce (Double Order): Improving Chinese E-Commerce
For decades, importers and retailers have racked up profits by buying Chinese-made items wholesale, bringing them to the U.S. and selling them at a markup. Temu tries to do the same thing, but pledges a streamlined link between consumers and manufacturers.
But Temu has quickly made inroads — one metric of the retailer’s impact is U.S. mail carriers, including one who recently described to Forbes the phenomenon called being “Temu tired,” as she seemingly delivers more of the company’s orange-labeled packages each day.
Amazon’s lead is secure as the company recently reported $170 billion in net quarterly sales, which includes $70.5 billion from its online stores and $43.5 billion from third-party seller services.
Compared with Shein, Temu focuses less on clothes and more on cheaper home goods and plasticware. It’s increasingly mentioned as one of the biggest threats to Amazon’s e-commerce domination.
Temu’s strategy follows a model that Pinduoduo, the huge Chinese retailer behind Temu, honed when it streamlined connections between farmers and consumers in China’s food and produce sector. More than 16 million farmers were able to sell their produce to more than one billion shoppers through the U.N. Food and Agriculture Organization.
“Dispatching goods directly from the source eliminates the need for multiple stages of transportation and warehousing,” a Temu spokesperson told NPR, “addressing what is often the most significant expense and inefficiency in conventional retail operations.”
Temu sells “hot deals” such as a hooded button-up fleece jacket for $8.32 or a car-mounted vacuum cleaner for $13.47. Eye-catching prices like those are frequently cited in its online ad campaigns.
“In less than a year, this business has spun up an online retailer that is, like, 75% the size of [Target.com], which is enormous,” The Atlantic’s Amanda Mull told NPR last fall, citing Temu’s $16 billion in revenue in 2022.
