Hundreds of Chinese merchants supplying global discount shopping app Temu stormed the company’s offices in Guangzhou on Monday, waving protest signs and chanting slogans accusing the company of defrauding suppliers.
Tem is trying to squeeze every last penny out of its business model to fund massive expansion, and suppliers say one of its tactics is to impose steep fines when customers complain about the quality of its products.
The protesting suppliers claim that Tem and its parent company PDD Holdings are imposing increasingly heavy fines for everything from late deliveries to returns from customers complaining of poor quality.
Protesters said the fines have skyrocketed in recent months without the e-commerce giant offering any rational explanation. Bloomberg News was suggested On Tuesday, he said the real reason Tem urgently needs cash is to fund his global ambitions.
The battle coincides with an aggressive expansion of the Temu brand around the world. PDD and its Temu platform shot to fame with a big-budget Super Bowl ad in 2023. It has since begun challenging Chinese online shopping giant Shein and even Amazon.com in certain areas. It just launched in Thailand this month.
This breakneck global expansion briefly made U.S.-listed PDD, short for Pinduoduo, China’s most valuable e-commerce company, overtaking longtime leaders Alibaba Group Holding Ltd. and JD.com.
of South China Morning Post (Not surprisingly, it’s owned by Temu’s competitor Alibaba.) Quote A Guangzhou merchant considered himself a “victim” of Tem’s tough policies. He said almost all of the profit he made from transporting $5.5 million worth of goods through Tem last year had been wiped out by huge “penals” from customer complaints and refunds.
Other merchants say they have been victimized online. loss After selling millions of dollars worth of products through Temu, fines for e-retailers can reach five times the retail price of the goods, and Temu exempts its customers from fines because customers do not have to return products they are not satisfied with. So if a Temu customer is not satisfied with a $500 smartphone, the manufacturer can confiscate the phone and be fined up to $2,500.
Tem suppliers have held two small, peaceful protests so far, but on Monday dozens stormed the PDD office and stayed there until police arrived. Videos posted on social media showed angry traders surrounding the office.
Watch the video:
https://www.youtube.com/watch?v=zh90bDs8U8k
Tem released a statement on Tuesday acknowledging that some suppliers were “dissatisfied” with the company’s handling of “after-sales issues regarding product quality and compliance.”
“These dealers refused to resolve the disputes through normal arbitration or legal means as outlined in the sales contracts. The situation has stabilized and we are actively working with the dealers to find a solution,” Tem said, without commenting directly on Tuesday’s protests.
Online shopping giant Temu’s latest expansion was launched on Monday, with the company starting selling cheap Chinese products in Thailand.
of Bangkok Post Warned It said Mr. Tem’s entry “could incite price wars in the local e-commerce market, affecting Lazada, Shopee and TikTok, and raising concerns that more local factories may close.”
Thai businessmen complain that Tem is “like a factory that sells directly to consumers,” a business model that local manufacturers simply can’t compete with, especially as Tem uses its enormous financial advantage to subsidize key products at discounted prices to lure new customers.Tem’s new offerings, for example, include paper napkins that sell in Thailand for about one-third of their regular price.
“The Temu Thailand app offers 90 days free product returns, up to 90% off products, and a discount coupon set worth 70 baht.” Bangkok Post I got it.
70 baht equals roughly $1.95, a lot of money for Thai consumers. The favorable exchange rate between the Chinese and Thai currencies is also expected to be a big advantage for Temu.
TEM is accused of profiting from slave labor by encouraging its suppliers to use cotton from Chinese-occupied East Turkestan, where China is detaining large numbers of the region’s Uighur Muslim population in forced labor camps.
The U.S. will enact a law called the Uyghur Forced Labor Prevention Act (UFLPA) in 2022, which presumes that all products from Xinjiang are tainted with forced labor unless the supplier proves otherwise. The House of Representatives Special Committee on the Communist Party of China released a report in June 2023, stating that “there is an extremely high risk that Tem’s supply chain is contaminated by forced labor.”
Additionally, Rep. Blaine Luetkemeyer (R-Missouri) warned in February 2024 that Tem’s “sister company” PDD is “known to facilitate trademark counterfeiting and copyright infringement,” spies on customers, and maintains harsh working conditions that have reportedly resulted in the deaths of at least two employees.
