How does Temu react to pricing threats?

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The recent Trump administration’s pricing threats have increased uncertainty on the TEMU business model and other major electronic commerce groups. The White House overturned its initial closure in 2025 of an escape This allowed the low-value packages shipped from China to enter the United States with a minimum of agitation and without import taxes. But the risk of a permanent movement persists.

Opinion is divided on the resulting threat to the company. The FT Lex column Argued: “The Chinese online store does not need a tax quirk to constitute a great threat to the retailers of bricks and mortar.”

However, for the economist, “many American consumers have been willing to neglect the often poor quality quality of Shein and Temu products because they are so cheap. This will change when prices and other customs fees will be added, which, in some cases, will double consumer prices. »»

What evaluation is the most convincing? Temu belongs to PDD Holdings, a Chinese company. TEMU operates an online B2C platform that was put online in the United States in September 2022. International expansion was rapid: by 2024, it operated in nearly 80 countries. Annual income was estimated $ 50 billion, a triple increase compared to 2023.

Most of the descriptions of the TEMU business model emphasize its ability to take advantage of lower labor costs in China to make millions of household products available to customers abroad. TEMU sells products manufactured by companies that have no internationally recognized brands. Although reports vary, TEMU has proven to have prices up to 80% of rival electronic commerce platforms and still offers free delivery and yields.

The slowdown in Chinese consumption growth has forced the country’s manufacturers to turn to other markets for their existing capacity, selling more close to marginal costs. TEMU was well placed to capitalize on this situation.

In 2024, long before President Trump’s last decision, TEMU would have taken over the officials of civil servants Washington And Brussels These low -cost imports would be subject to more difficult import plans. Discomplete political movements are not limited to Western economies. Indonesia was a start moverimposing restrictions on foreign electronic commercial platforms in September 2023.

However, political changes take time to be promulgated and deployed. Sometimes, changes in commercial policy to be browsed do not occur at all and, even if they do, restrictive measures can be reversed after a reaction from the customers who have been injured. Tens of millions of Americans and Europeans use the application of TEMU.

Practical considerations also refrain. Currently, US customs officials simply do not have the capacity to process additional documents. These considerations are taken into account because companies assess their exposure to additional protectionism. Temu took them into account in a series of quick responses:

• International sales diversification pushes to reduce dependence on the American market within half of the world’s income

• The supply of products sold on the American market from non -Chinese sites

• Offering to sell on its platform products from other companies, which retain responsibility for shipping their products to the United States

• Configuration of warehouses in the United States and shipping of complete containers from China, renouncing customs duties exemptions

These movements highlight the different degrees of freedom available for electronic commercial platforms that work internationally. Trade tensions and trade wars tend to be bilateral or confined to a small number of countries. With more than 200 customs of customs around the world, TEMU has many options to reconfigure its commercial imprint and its operations.

But are the movements described above enough to ensure that the company continues to thrive? And what costs – explicit and hidden – are involved? Since competition is always relative, consideration must be given to the relative forces of other electronic commerce platforms, brick and mortar retailers and companies reaching customers thanks to an omnichannel strategy, which offers transparent experience between Websites, applications, social media and other channels.

Given that the commercial models of electronic commerce have a “Winner takes everything”, Temu could have already become so great that he can take protectionism in his stride?

Carlos Cordon is a professor of strategy and management chain management at IMD. Simon J. Evenett is a professor of geopolitics and strategy at IMD and co -president of the Global Futures Council on the Trade and Investment of the World Economic Forum.