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Chinese e-commerce giants Temu and Shein are scrambling to offset devastating losses in the American market by pivoting aggressively toward Europe. However, mounting regulatory pressures across the continent suggest their troubles may be far from over.
The platforms experienced dramatic downturns following the Trump administration's trade policy overhaul. Consumer Edge Research data reveals that Temu's U.S. spending plummeted 36% year-over-year in May, while Shein suffered a 13% decline during the same period. These figures coincided with the closure of America's small package tariff exemption and the implementation of 54% duties on Chinese imports.
"As regulatory and trade pressures intensify in the U.S., Temu and Shein are increasingly turning to Europe and the UK as critical growth markets," noted Anand Kumar, associate director at Coresight Research.
European markets initially appeared promising for the struggling platforms. Temu achieved remarkable 63% growth in EU consumer spending and 38% in the UK during May. Shein recorded comparable success with 19% EU growth and 42% UK expansion over the same timeframe.
Yet this European surge coincides with escalating scrutiny from regulators and consumer protection agencies. The pan-European consumer organization BEUC recently filed formal complaints against both platforms, alleging deceptive practices and "dark patterns" that manipulate user behavior. "The EU's proposed €2 customs fee is more than a minor surcharge, it's a strategic regulatory move aimed at curbing the unchecked growth of ultra-cheap cross-border e-commerce," Kumar explained, warning of potential operational reshaping over the next two to three years.
French lawmakers have specifically targeted ultra-cheap platforms through proposed "anti-fast fashion" legislation, while European Commission investigations probe Shein's compliance with consumer protection laws. Product safety concerns add another layer of complexity, with German authorities discovering that 95% of tested items from Asian e-commerce platforms failed European standards.
The regulatory landscape presents formidable challenges for expansion. Xiaomeng Lu from Eurasia Group observed that while these platforms "offer cost effective solutions and an efficient supply network," their "labor practices and human rights standards may not fully align with high value markets like the EU and U.S."
"Everyone is now putting all their efforts into prioritizing the US market," stated Wang Xin, head of the Shenzhen Cross-border E-commerce Association, emphasizing that merchants view American market preservation as more urgent than European exploration.The platforms face an uncertain future as European policymakers consider eliminating the €150 customs exemption threshold. With 4.6 billion low-value parcels entering the EU in 2024—double the previous year's total—regulatory pressure continues mounting.
