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Temu’s owner is now under fire from the place where it first set up shop.
China-founded PDD Holdings, which owns Boston-headquartered Temu known widely for its ultra-low prices and direct-from-China shipping, as well as Pinduoduo, a low-price Chinese commerce marketplace, now faces scrutiny from Chinese watchdogs.
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According to Bloomberg, officials from the State Administration for Market Regulation (SAMR) and the Ministry of Commerce met with members of PDD Holdings, Temu’s parent company, to address a returns policy it deems unfair to sellers.
That policy allows shoppers to receive refunds for products without returning the item to Temu. That, the watchdogs reportedly said, puts unnecessary and unfair strain on small sellers’ businesses, cutting into their margins. While the SAMR and the commerce ministry have asked PDD to remediate the issue, Bloomberg reported that they did not provide specific suggestions to do so, nor did they explicitly state that the refunds-first policy must be quashed entirely.
Earlier this year, Chinese merchants stormed PDD’s Guangzhou, China-based office in protest of harsh fines Temu imposed on sellers. At the time, merchants complained that Temu handled post-sales issues poorly, resulting in losses amounting to millions of Chinese yuan—or hundreds of thousands of U.S. dollars.
Temu’s parent company, PDD, did not return Sourcing Journal’s request for comment on the policy or whether it plans to change it. However, at the time of the protests, a Temu spokesperson told Sourcing Journal it was “actively working with merchants to find a solution” to the issues that brought on the protests.
The outrage from the Chinese watchdogs come at a time when selling on Temu or competitors AliExpress and Shein may become more expensive for China-based merchants. The cost of doing business continues to increase for global organizations, with supply chain leaders and retailers reporting higher transportation costs. To add to that issue, U.S. officials have been considering reducing or eliminating the de minimis loophole, which allows low-cost, direct-from-China shipments to enter the country with minimal scrutiny.
If the government follows through on making such changes—particularly if officials decide to impose a China-only de minimis cut—it could bring added costs to Temu’s sellers, who may incur higher costs associated with tariffs they currently aren’t required to pay.