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Temu app: platform does massive marketing

Photo: Hannes P Albert / dpa

“Shop like billionaires,” advertises the Chinese cheap platform Temu. With success: According to the web analysis company Similarweb, Temu takes first place in the ranking of the most downloaded shopping apps in Germany in 2023. But consumers' enthusiasm for the cheap offers on such online marketplaces is increasingly becoming a problem for German retailers.

Trade experts and associations are therefore calling for stricter action against Chinese platforms. "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, to the dpa news agency. This would create 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.

Trading platforms like Temu do not need 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 can make things easier for themselves because politicians and authorities don't control them so much, that would be unfair.

According to HDE, the volume of parcels from China is a Europe-wide problem. 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."

The HDE is therefore calling for customs, which is responsible for parcel handling, to be strengthened. “Customs are simply overwhelmed by the sheer volume,” said Tromp. One starting point could be a digital platform on which every shipment has to 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.”

Retail expert appeals to consumers

Kai Hudetz from the Institute for Trade Research (IFH) also believes stronger government regulation is necessary. »It's 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.«

Temu recently caused a stir with mini prices, discount offers of up to 90 percent and sometimes bizarre products. One in four people between the ages of 16 and 65 in Germany have bought there in the last six years, according to a survey by the market research company Appinio. Temu is in fourth place in the rankings, just behind Otto.

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's success is also remarkable because things haven't been going well for online trading recently. 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.

Trading expert Hudetz explains Temu's rapid rise as follows: »Temu is Google's largest customer worldwide. They’re pumping incredible money into online marketing,” he said. This is currently an unprofitable business - especially since predominantly cheap, low-margin products are being sold. But the Chinese platform is able to invest in the market in the long term, says Hudetz.

Consumer advocates warn of additional costs

The consumer advice center advises caution when shopping via Temu: Consumers should find out about the applicable customs regulations before purchasing if they order from retailers outside the EU, according to a consumer protection advice page. Otherwise, buyers may incur additional taxes and customs fees.

Customers should pay when they have received the goods and are satisfied - not in advance.

mmq/dpa