In an era where digital retail has become a cornerstone of consumer habits, Temu and Shein, two titans of budget e-commerce hailing from China, are navigating turbulent waters as they attempt to expand into Europe. With setbacks in the U.S. due to increasingly restrictive trade policies and a closure of tariff exemptions for small packages, their strategic pivot to the European market might seem like a lifeline. However, the burgeoning challenges they face in this new territory indicate a precarious journey ahead.
As Temu and Shein shift focus towards Europe, their initial enthusiasm is tempered by a wave of complaints filed against them. These grievances highlight alleged unethical business practices, suggesting that the warm embrace they hoped for may instead morph into a cold reception. Recent regulatory decisions, such as the European Union’s proposed two-euro fee on previously customs-exempt packages, point to a collective desire within Europe to rein in the unchecked expansion of discount online commerce.
The Regulatory Pressure Cooker
Experts have identified a troubling parallel between the scrutiny Temu and Shein are now facing in Europe and the investigations that preceded their decline in the U.S. Regulatory experts like Anand Kumar from Coresight Research warn that the proposed customs fee isn’t just a minor inconvenience; it’s a calculated maneuver aimed at constraining the rapid rise of ultra-cheap e-commerce platforms.
The implications of these regulations go far beyond mere cost structures; they potentially reshape consumer behavior in Europe. Unlike the U.S. experience, where regulatory pushback has already begun to manifest as reduced app engagement and spending, the European market’s response remains uncertain. However, the EU’s proactive steps indicate a readiness to impose stringent standards around product safety, transparency, and consumer rights that Temu and Shein will be challenged to navigate.
Marketing Tactics and Consumer Trends
To counterbalance their U.S. downturn—where Temu’s consumer spending nosedived by 36% in May compared to the previous year, while Shein experienced a more modest decrease of 13%—both companies have ramped up advertising expenditures in key European countries like the U.K. and France. Recent statistics show that their strategy appears to be paying off, with spending growth in Europe demonstrating a striking 63% increase in the EU and 38% in the U.K. during the same timeframe.
However, it’s critical to acknowledge that marketing prowess alone cannot overcome the mounting regulatory pressures. While Temu and Shein’s ad campaigns are likely attracting new customers, underlying issues such as ethical labor practices and compliance with European standards loom large. As Xiaomeng Lu from Eurasia Group notes, the conflict between their cost-effective business models and the heightened human rights and labor standards expected within the EU poses a significant risk.
Tough Love from Legislation: The ‘Anti-Fast Fashion’ Movement
The wave of discontent doesn’t stop at regulatory fees; there are broader societal and environmental concerns informing European legislation. The proposed ‘anti-fast fashion’ bill in France is case in point. It aims to penalize fast fashion brands for their environmental impact—a direct shot at Temu and Shein’s operational models, which are often criticized for contributing to waste and unsustainable consumer habits.
Moreover, organizations like BEUC are mobilizing against these platforms, filing complaints over practices deemed as deceptive or manipulative, asking for greater accountability. If successful, such measures would necessitate a reconsideration of business practices for both Temu and Shein, adding yet another layer of complexity to their European ambitions.
The Road Ahead: Navigating Compliance Challenges
The regulatory landscape in Europe is evolving rapidly, with demands for companies to address sustainability and human rights issues intensifying. The impending Corporate Sustainability Due Diligence Directive—which requires businesses to disclose their environmental metrics and address human rights violations—adds an urgent layer of compliance that Temu and Shein cannot ignore.
As these directives come into play by July 2026, both companies face potential legal and operational ramifications should they fail to align themselves with these necessities. The road ahead is lined with stringent compliance requirements meant to ensure ethical business practices, and the likelihood of navigating this minefield without repercussions remains uncertain.
Overall, the move into Europe is not just a quest for growth; it’s a test of adaptability and ethical accountability for Temu and Shein. With every regulatory hurdle, they risk alienating consumers who increasingly prioritize not just price, but also the values of sustainability and fairness in their shopping choices. The question remains: can these budget e-commerce giants pivot successfully in a market demanding more than just low prices?