Temu's corporate parent experiences monumental surge in sales revenue
Despite facing criticisms for selling subpar products and causing significant environmental damage, Temu continues to dominate global markets. The company's parent organization, PDD Holding, based in Shanghai, has seen a substantial surge in revenue and profits. In the second quarter, the company reported a 144% increase in profits, raking in a net quarterly profit of 32 billion yuan (approximately four billion euros). Revenue also spiked by 86%, totaling 97 billion yuan (around 12 billion euros).
PDD's portfolio includes the popular Chinese delivery service Pinduoduo. While Temu, its international counterpart, has gained popularity by offering extremely discounted items, it has also drawn flak for its inconsistent quality, delayed deliveries, and devastating environmental footprint. The European Union is currently contemplating a strategy to tackle these issues, with plans to adjust its regulations soon. At present, goods worth less than 150 euros imported into the EU are exempt from customs duties. Given that around two billion such packages arrived from overseas nations in the EU last year, the EU Commission intends to eliminate this threshold, potentially by the end of July, as per reports from the Financial Times.
Opposition to the EU's plans within Europe
In addition to Temu, AliExpress and clothing retailer Shein are also under scrutiny. Tech corporations and Ecommerce Europe, an organization that includes Amazon and eBay, voiced concerns about this proposed change. Some companies fear potential retaliation from EU trading partners. An EU official remarked to the Financial Times that achieving consensus among EU countries might be challenging due to the increased responsibilities of already burdened customs officials if the 150-euro threshold is eliminated.
In an interview with ntv.de, trade expert Joerg Funder emphasized the limitations of relying on a slight increase in customs duties as a solution. According to his view, consumers are unlikely to abandon Temu due to a few extra cents or euros in customs charges.
PDD's founder, Colin Huang, was previously employed by Google in China. With a net worth of $48.6 billion (around €44.5 billion) as per Bloomberg's rankings, Huang now stands as the wealthiest individual in the country. He ranks 25th globally on the wealth index.
Despite the criticisms towards Temu for its questionable product quality and environmental impact, online shopping platforms like AliExpress and Shein, also operating under PDD Holding, continue to thrive in the EU market. However, the EU is contemplating adjusting its regulations, potentially eliminating the threshold for customs duties on imported goods below 150 euros, which could potentially impact these platforms.
