The rise of Chinese webshops like SHEIN and Temu is undeniable. With a 68 per cent increase in orders in just six months, their success seems unstoppable. But their growth also raises critical questions. Is this success due to a clever business model, or are they simply flooding the market with cheap, inferior products? So begins Dirk Mulder, sector specialist Trade & Retail at ING Sector Banking.
The low price point of these platforms is undeniably attractive to consumers. SHEIN and Temu exploit their direct access to Chinese manufacturers and low production costs to offer products at unparalleled low prices. At a time when inflation is straining purchasing power, it is understandable that consumers would choose this option. But it would be unrealistic to blame them for preferring affordable options to more expensive products from local retailers.
Dirk Mulder, sector specialist Trade & Retail at ING Sector Banking.
Unfair competition
The problem is not just with consumers looking for bargains. At the same time, we can ask whether these Chinese platforms follow the same rules as European companies. There are reports of unsafe products that do not meet strict European standards, posing a risk to consumers. Transparency about working conditions in the production chain is also often lacking.
Hyperefficient
It should also be remembered that platforms like SHEIN and Temu owe part of their success to innovation. Their hyperefficient supply chain, technology-driven approach and direct sales to consumers are examples of a disruptive business model.
Broader discussion
The real problem may not lie in the quality of the products themselves, but in the gaps in regulation and enforcement at European level. Instead of just condemning the rise of Chinese online shops, we need a broader discussion on the responsibilities of consumers, businesses and governments alike in this globalising market.
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Dirk Mulder, sector specialist Trade & Retail at ING Sector Banking: