DIHK calls for safeguards against encroachments by Temu and Shein
European markets are being swamped with affordable goods from Chinese online platforms, causing issues for local traders and manufacturers. These platforms frequently succeed in bypassing customs regulations. The DIHK proposes strategies for countering unfair competition.
As per the German Chamber of Industry and Commerce (DIHK), millions of small packages arrive in the EU annually, with approximately 400,000 arriving in Germany daily from China alone. The problem lies in that retailers like Temu and Shein don't always accurately declare their items, leading to widespread under-reporting and tax avoidance. "Billions are potentially lost to the treasury," states the DIHK.
These platforms also disregard European product, social, environmental, and trademark norms. "These unlawful practices endanger local business models," the paper suggests. In particular, Chinese platform Temu frequently undercuts competitors with rock-bottom prices. Previously, it has offered a smartwatch for €7.28 and a smoothie mixer for €8.69. This pricing strategy has drawn attention from politicians as well. In response, the EU introduced the Digital Services Act (DSA), imposing stricter measures against illegal products and content.
DIHK foreign trade chief Volker Treier believes that these steps are not enough. "So far, measures taken by the EU Commission, such as the Digital Services Act, have not been successful. Immediate action is required in this regard," he told the newspapers. Although international trade is commendable, it must be carried out in a fair manner.
"Fair competition isn't just an issue for German retail, but also for manufacturers. While German and European companies operate under stringent regulations and standards, some non-European online marketplaces disregard these laws, thereby avoiding costs and offering goods at exceptionally low prices," Treier further explained.
The chamber now suggests enforcing stricter controls on imported goods. The EU Commission should make sure that sufficient resources and staff are allocated to consistently enforce legal obligations. The DIHK also advocates for World Trade Organization (WTO) rule reforms. While selling goods below production cost is prohibited, WTO rulebook revisions are needed "to address specific challenges of e-commerce platforms," the paper states.
In addition to this, the DIHK supports applying sanctions for violations of EU standards and advises a forward-thinking trade strategy for Europe. "While European efforts mainly focus on reinforcing urban retail, third countries like China are actively establishing tomorrow's e-commerce global standards and structures. Europe and Germany need to respond to this," the paper concludes.
The EU Commission needs to allocate sufficient resources and staff to enforce legal obligations on imported goods, especially from China, due to the widespread under-reporting and tax avoidance by platforms like Temu and Shein. This is essential to ensure fair competition and protect local businesses and manufacturers from being undercut by these platforms.
Additionally, the World Trade Organization (WTO) rulebook needs to be revised to address the specific challenges posed by e-commerce platforms, as some non-European marketplaces, such as Chinese platforms, disregard European laws to offer goods at exceptionally low prices, which is not only detrimental to retailers but also to manufacturers operating under stringent regulations and standards.
