Temu spreads wings to take on e-commerce rivals

Temu spreads wings to take on e-commerce rivals

Amid growing scrutiny over e-commerce regulations, Chinese platform Temu is accelerating its expansion into new markets.

Temu spreads wings to take on e-commerce rivals

Temu’s cross-border platform is reportedly preparing to enter the South Korean market. In February it announced plans to introduce a local-to-local model in South Korea and recruit sellers for its online marketplace. The platform will now facilitate direct sales and distribution of South Korean products, moving beyond its existing model of selling mostly Chinese products through direct overseas purchases.

“The initiative will enable us to offer South Korean consumers a diverse range of local products while providing South Korean sellers with a new sales channel to connect with millions of customers,” a Temu representative said.

Unlike its usual model of shipping from China, the local-to-local approach means South Korean sellers will manage inventory and shipping themselves. Temu’s model is expected to be available in other key markets, including North America, the United Kingdom, Europe, Japan, and South Korea.

This move comes amid concerns over the “de minimis” policy, a regulation that exempts goods worth less than $800 from duties when imported into the United States – a rule that has existed since the 1930s. Although US President Donald Trump temporarily suspended the exemption in February to improve the customs system, future changes to this policy could impact trade balances and create new opportunities for domestic companies in response to the expansion of foreign e-commerce platforms such as Temu, Shein, and AliExpress.

According to the US Customs and Border Protection, the agency expected to process more than 1.3 billion low-value duty-free packages in 2024, a 10-fold increase from 2015. The total value of these goods has also surged from $5.3 billion in 2018 to $66 billion in 2024. The potential abolition of “de minimis” is seen as a measure to curb unfair competition from foreign e-commerce companies against domestic US businesses.

A report published by Maybank in February highlighted Temu’s aggressive expansion in the US market outside of China. Investors are now concerned that both Temu and Shein may shift their resources to other regions, particularly ASEAN, increasing competition for already established e-commerce players such as Shopee.

In Vietnam, regulatory challenges have also slowed Temu’s entry. At the end of 2024, at the request of Vietnamese authorities, Temu had to lock its Vietnamese-language version and temporarily suspend operations while awaiting an official licence.

Temu is working with the Vietnam E-commerce and Digital Economy Agency under the Ministry of Industry and Trade to register its provision of e-commerce services in Vietnam, the firm stated on its website, confirming that it has not yet completed the necessary legal procedures to operate in the country.

Hoang Ninh, who is deputy director of the Vietnam E-commerce and Digital Economy Agency, said that Temu’s parent company, Elementary Innovation, has implemented a number of measures as required, including temporarily stopping the provision of e-commerce services in Vietnam. This includes ceasing the use of Vietnamese when providing services on its website and mobile application.

At the same time, the company has been coordinating to complete application procedures for a licence in accordance with Decree No.52/2013/ND-CP and its amendments under Decree No.85/2021/ND-CP on e-commerce.

“The platform’s management unit has submitted the required documents to the authorities, but it must wait for an official assessment before approval,” Ninh said.

Throughout 2024, Temu dominated mobile app download charts in over 40 countries, including major markets such as the US, Europe, South Korea, and the Middle East. Downloads surged by 69 per cent on-year, reaching 550 million in 2024, while cumulative global downloads neared 900 million as of December 2024.

VIR