The Shein and Temu Problem

Welcome to Crossroads. Chances are, if you've been browsing social media, you've come across advertisements for goods that are, well, just a little too good to be true. And when you click through to those websites, you find yourself in a Chinese marketplace. Now, one of these big ones is Shein. It's a fashion retail company based in Nanjing, China. The other big one is Temu, an online marketplace similar to Amazon, only based out of China, and with most of its goods shipped directly from China to you. Yet now the companies are coming under scrutiny, both in the United States and in the European Union. And as the controversy unfolds, well, there's a good chance policies could move on them in a similar way to the TikTok restrictions. Now, I'm gonna go deeper into this. Let me explain. Now, Temu in particular has become one of the top downloaded apps in the United States. The company appeared on app stores in 2022, and within just four months, it was one of the most downloaded free apps on both the App Store and Google Play. But almost immediately, it was running into some serious issues. Here's what Time had to say back in December of 2022. It said Temu offers steep discounts on a slew of products, mostly shipped directly from Chinese factories or warehouses. In addition to incredibly low prices, it said, Temu can no doubt attribute its popularity to its strategy of giving free stuff to users who promote the app on their social networks and get friends and family to sign up. But it adds the company, the US offshoot of Chinese e-commerce giant, Pinduoduo, is also starting to develop a reputation for undelivered packages, mysterious charges, incorrect orders, and unresponsive customer service. It says that Temu has already been subject to more than 30 complaints to the Better Business Bureau, this was two years ago, and has a BBB customer rating of less than 1.5 stars. And Time also added something important, stating, Temu's business model, if it catches on, could also have major implications for US retailers and the global supply chain in the coming year. So what's the problem? Well, according to Time, the company was already running into controversies, but it noted that to understand the cheap prices and how the whole company operates, it may be good to look at the Chinese company that it's an offshoot of, Pinduoduo. Both Pinduoduo and Temu are subsidiaries of Pinduoduo Inc. And here's what Time noted. It says, Temu's sister company, Pinduoduo, has long been accused of hosting sales of counterfeits, illegal goods, or products that do not match their descriptions. Notes that Pinduoduo wrote in its SEC filings that it immediately removes unauthorized products or misleading information on its platform and freezes the accounts of sellers on the site who violate its policies. It notes there have been no BBB complaints that allege the goods that Temu ships are counterfeit or fake. And additionally, in 2021, the deaths of two Pinduoduo employees spurred investigations and boycotts over the company's working conditions at a time according to New York Times. Now, remember, the big issue here, the United States and other countries have been sanctioning Chinese companies for issues that include state subsidized products, slave labor, and other issues along these lines, raising concerns both of unfair trade practices under the Chinese Communist Party and also potential human rights abuses. Again, under the Chinese Communist Party. When products are shipped straight from China without any intermediaries, it then usually means that the only oversight is on the CCP, a decision the CCP's authorities have to make and also whether, frankly, they'd want to investigate and notably whether they'd be willing to target what's becoming one of the country's biggest money makers outside of China, notably at a time when the CCP is facing problems of overstocking in its manufacturing, meaning they don't have it in their interest to go after these companies. And if the only body looking into whether a company is using slave labor or abusing its workers is the CCP and its authorities and nobody else can go in and properly audit them, well, how can you trust anything? Now, remember, beyond that, there are other problems with Pinduoduo and Temu and Xin and all these companies, problems related to Chinese apps in particular, how they operate, how the data can be gathered and so on. 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So don't wait. Call the number on your screen today and secure your financial future. Welcome back. Chinese apps like Tembo and Shein are becoming some of the most popular apps in the United States. But these companies are now coming under scrutiny for their business practices, which could have major implications for US retailers and also for global supply chains. Now look, beyond those points though, there were other problems. Problems relating to Chinese apps in particular, you know, how they operate and also the data they gather on users. Now you might remember with the recent US restrictions on TikTok, a big part of the concern raised by US regulators was that the CCP may be able to gather data on users from those apps. And now Temu in particular is also being accused of this. In fact, some of the key issues as well on this. In fact, Arkansas Attorney General Tim Griffin has filed a lawsuit against Temu and he's warning Americans that the Temu Marketplace app is effectively a data theft business. Watch. Temu is not an online marketplace like Amazon or Walmart. It's a data theft business that sells goods as a means to an end. What Temu is doing is selling goods at a rock bottom price, not to make a profit off of those, but as a way to get into your phone, your device, and to collect your data, not just traditional consumer data, but using malware, spyware, to have complete access to your information. And one step further, their code is written in such a way to evade detection. All of this against the backdrop of who owns the company, who operates the company, which are Chinese communist officials, former Chinese communist officials. Now here's more on the lawsuit from the Epoch Times. It says the lawsuit filed against the firm's parent company is seeking a jury trial as well as permanent block against Temu's data collection activities. It also seeks a $10,000 fine for each violation of an Arkansas state law known as the Deceptive Practices Act. The suit primarily cites research, it says, from Grizzly Research, which analyzes publicly traded firms and alleges that Temu can, quote, purposefully gain unrestricted access to a user's phone operating system, including, but not limited to, a user's camera, specific location, contacts, text messages, documents, and other applications. Now, look, Temu denied the allegations and claimed the allegations in the lawsuit are based on misinformation, right on their side. But aside from the lawsuit, the allegations of data theft and malware and the allegations of the company having former CCP officials involved, there's also the issue of trade practices just in general, right outside of that. Here's what Epoch Times had to say on that point. They note, in its research report, Grizzly Research said that it suspects that Temu is, quote, already or intends to illegally sell stolen data from Western country consumers to sustain a business model that is otherwise doomed for failure. It notes that Temu is estimated to be losing $30 per order. Its ad spending and shipping costs, one to two weeks from China, expedited to US delivery are astronomical, the report says. And they add, quote, one is left wondering how this business could ever be profitable. Temu is a notoriously bad actor in its industry, they say. And they add that we see rampant user manipulation, chain letter-like affinity scams to drive signups and overall, the most aggressive and questionable techniques to manipulate large numbers of people to install the app. Now, that's gonna be concerning as well because these types of trade practices are causing problems, not just for Temu, but also for Xi'an. And already both Chinese companies, both of these, they're getting grouped together in some of the international pushback. The Guardian says this, the EU, the European Union, is moving forward with plans to impose customs duty on cheap goods in a ship that could hit imports from online retailers and harm a hoped-for London listing by the fast fashion seller Xi'an. Notes the potential change comes amid growing disquiet among retailers based in mainland Europe, the UK, and the United States about rising competition from the Chinese-linked marketplaces Xi'an and Temu, which they say exploit a loophole that excludes low-value items from import duty. They note that in the EU, the European Union, the threshold for the levy, don't pay duty on it, is 150 euros. And in the United Kingdom, it's 135 pounds, enabling retailers such as Xi'an to ship products directly from overseas to shoppers in those markets without paying any import duty. In the UK, it says items valued at 39 pounds or less also do not attract import VAT, meaning, of course, that not only this company is gathering data on everybody, not only are they selling at a loss according to some of these documents, but they're also taking advantage of trade loopholes by selling individual goods rather than bulk directly to consumers. And again, by taking advantage of these loopholes, these companies doing it on such a massive scale are getting the attention of international regulatory bodies. Now, the article notes here that subsidized packages costs in China make it more cost-effective for businesses based there to send cheap goods by air because they can bypass the duty fees. So in other words, let's put it this way. If you've flown an airport and so on, you've probably seen those duty-free shops, right? Basically, what happens? You can buy products duty-free, right? Price is a whole lot lower than you pay at the normal markets, but you can only buy stuff from them normally if you're flying internationally. And what these companies have done is found a way to basically take advantage of that loophole. You get those discounts, but you don't have to fly to do it. All you have to do is download an app, and they use really just a loophole within the wording of the system to give you those discounts without having to go through that. And it's on this note that the European Union is considering closing off Temu and Xi'an from using this loophole. But there's more to this as well. The companies are doing so much shipping, they're doing this on such a large scale, that it's even causing problems for the industries, the shipping industries, especially when it comes to air freight. And because of this, that could also cause some of these companies to, well, raise their prices. The cost of shipping might go up because, again, they're taking advantage of it on such a massive scale. Sourcing Journal notes that air cargo demand soared in May, seeing its highest year-over-growth since January as global e-commerce giants like Xi'an and Temu bolster freight volumes and spark an industry-wide battle for cargo capacity. It notes that Temu and Xi'an combined ship around 9,000 tons of cargo worldwide every day, while Alibaba, another Chinese company, ships 1,000 metric tons daily, and TikTok airs 800 metric tons per day, according to February research from Cargofax Consulting. Then there's the other pesky issue of transparency and tech rules, especially when it comes to compliance for very large online platforms in Europe, one of the standards they use, of course, when it comes to regulation. And both Temu and Xi'an are facing problems along those lines. Not only that, in fact, companies outside of China are going to have to compete with these Chinese companies, and with the problems of cost they're bringing to global markets. Now, I'll be talking about this more only on EpicTV.com, the uncensored streaming platform of The Epic Times. So if you're watching on YouTube, Facebook, XRumble, click the link in the description below to get access to the rest of this episode. And not only will you get access to my whole library of shows, but also the other great shows we have, as well as family-friendly movies, premium investigative reports, and hard-hitting documentaries on issues that really matter. In fact, my documentary, The Final War, exposes one of the biggest threats to America, the Chinese Communist Party. The Chinese regime has a 100-year plan to defeat the United States, and this infiltration and subversion by the CCP is one of the biggest but least understood issues that is impacting the future of this country. And it's such an important issue, in fact, that I've dedicated my career to warning people about the threat of the CCP. If you'd like to watch this documentary, you can find the link in the description below as well. It's called The Final War. Let me show you a trailer before we go exclusively to EpicTV.com. I'll see you there. The greatest threat facing the United States is the CCP. The Epic Times investigation team had studied the CCP for years, but what we uncovered was yielding evidence beyond our imagination. With Chairman Mao, with the Prime Minister, our talks have been characterized by frankness. The Clinton administration said, oh, don't worry about it. This will be a poison pill for China. China's strategic goal is to make sure that the US has four enemies, and one of them must be a terrorist group. We are giving of our life's blood so that the Chinese Communist Party can survive and thrive.