Report from TechCrunch
In Brief – The European Commission has formally requested a wide range of information from fast-growing Chinese ecommerce platform Shein as part of its investigation of the business under the Digital Services Act (DSA). The law was enacted in 2022 to regulate how digital platforms address illegal and objectional content. Twenty-five platforms have over 45 million active users in the EU and are designated Very Large Online Platforms (VLOPs), including five online marketplaces — AliExpress, Amazon, Shein, Temu and Zalando. The Commission announcement says Shein has been asked to hand over internal documents and detailed information on concerns including illegal content and goods on its marketplace, measures adopted to mitigate risks relating to consumer protection, public health and users’ wellbeing, and the transparency of its recommender systems. All three China-based marketplace VLOPs now face DSA investigations.
Context – Shein and Temu have built giant retail businesses shipping inexpensive consumer products and apparel directly from factories in China to consumers globally. To give some sense of their growth, the Commission claims that more than 12 million low-value packages, meaning each valued at less than 150 euros, came into the EU per day last year. That was double 2023 and triple 2022. The flood of these packages is disrupting the retail industry. Other retailers complain that duty preferences given to those low-value consignments are being misused by giant retailers who simply sell products from Chinese factories. Consumer groups are now focused on Shein and Temu for the sale of unsafe products. Along with the DSA investigations, the Commission is proposing a host of other initiatives, including eliminating the duty relief afforded low value shipments, and coordinating consumer protection actions. In the US, the Trump Administration has eliminated the US equivalent of the duty-free threshold for packages from China, which is set at $800. That change, primarily intended to impact Shein and Temu, is paused as US Customs officials work out compliance processes for the duty collections.