The High Costs of Addressing the High Costs of Low Costs

Shein, Temu, and other Chinese online retailers like AliExpress (part of Alibaba Group) are a consumer’s dream.  They give American, European, and other buyers access to an immense array of low-cost goods, a particularly appealing feature at a time when many are stressed by the rising cost of living.  Politicians, regulators, and small businesses, though, are questioning if low cost might, in actuality, be quite costly.  Issues are being raised about the safety of goods these entities sell, the competitive pressures they impose on small- to medium- enterprises (SMEs), misleading advertising, consumer privacy violations, oppressive demands on suppliers, copyright violations, the marketing of illegal items, the sale of items made by forced laborers, and dependencies.[1]  To be clear, the last issue does not refer to the essentiality of their goods.  After all, most of what Shein, Temu, and AliExpress sell are lower-value items such as clothes, electronics, and household goods.  It refers to these platforms use of games, algorithms, and influencers to ensnare consumers and addict them.[2]

The European Union (EU) is one party moving aggressively to control these entities.  For instance, this long-time champion of free trade has opted to terminate the tariff exemptions for small packages, around 90 percent of which came from China in 2024, two years earlier than originally planned (2026 v. 2028) and institute a bloc-wide package handling fee.  One trade commissioner argued the EU’s move was “‘a crucial step in ensuring the European Union bolsters its position in the face of rapidly changing trade realities…and send[s] a strong signal that Europe is serious about increasing its competitiveness and ensuring fair conditions for its businesses.’”[3]  Forces pressuring the EU to act include online retailers, industry associations, and local governments as well as Washington’s recent decision to eliminate the “de minimis” exemption which allowed packages worth less than $800 to enter the United States (US) duty free, which could spur more packages being routed to Europe.[4]  Despite the backlash, consumers still seem to find it fashionable to take partake of these platforms’ offerings whether sold through online or physical channels.[5]  For their part, Chinese experts denigrate EU moves as unilateral, discriminatory, and burdensome to European consumers.[6]

To be clear, Europe and the US are not the only ones cracking down on low-cost parcels and these firms.  As for the parcels’ issue, in late November, the ruling party in Japan, the Liberal Democratic Party, began considering a higher consumption tax on goods imported through larger platforms which would include Shein and Temu as well as eBay.  The current exemption is seen as disadvantaging domestic retailers.[7]  In October 2024, Indonesia moved to block Temu in order to alleviate some of the pressure on its local businesses flowing from the online retailer.[8]

In tandem with their battle against low-cost competition, European policymakers and regulators find themselves addressing riskier matters.  In France, there was talk of banning Shein for having weapons and childlike sex dolls offerings on its site while French prosecutors launched an investigation of Shein, Temu, AliExpress, and others for allegedly disseminating child phonography.  In the backdrop, French politicians and retailers have been up in arms about plans for Shein to open low-cost stores within higher end retailers in France.  Critics charge Shein and its ilk are “destroying jobs, shops, and regions” with Shein retorting that it improves the distribution of French goods and retailers, an argument many dismiss.  Regardless, Shein stated it had acted against problematic third-party sellers and would work with the government.[9]  Despite this, France called upon the European Commission to investigate Shein for violations of EU regulations.[10]  By the end of November, the Commission acted, formally asking Shein “‘to provide detailed information and internal documents on how it ensures that minors are not exposed to age-inappropriate content…as well as how it prevents the circulation of illegal products.’”  It is important to note that European governments are not only probing Shein for legal and regulatory violations, but also other Chinese platforms and even American ones like eBay and Wish.[11]

The battle against Shein, Temu, and others in Europe entails the same themes many countries outside Europe are confronting as they face the China challenge as well as the struggles many are having trying to regulate internet content.  In the former, we see anxieties about the potentially large costs that huge inflows of lower-cost Chinese goods are imposing on businesses bumping up against the desire of consumers for cheaper goods.  Resolving this contradiction will require hard political decisions about whether consumers or producers and intermediaries should take priority.  For now, the trend is in the direction of protecting the second group, which is to be expected given it can mobilize much more easily than consumers.  In the latter case, we see politicians and regulators struggling to control the content of platforms that offer an immense volume of constantly shifting goods and serve an army of constantly shifting sellers.  At present, the inclination in Europe and other regions like Southeast Asia is to exert greater control over content in the name of protecting children as well as cultural, social, and religious sensitivities.  All the above will increase operating costs and political and regulatory risks for businesses.  It further boosts the potential for economic and political conflict between China and Europe and the US and other parties as Beijing and Washington react to protect their firms.  Dealing with the high costs of low costs may be costly indeed.

Image courtesy of Danielll10, CC BY-SA 4.0 <https://creativecommons.org/licenses/by-sa/4.0>, available at https://upload.wikimedia.org/wikipedia/commons/4/4c/Estuche_Shein.jpg.

[1] Nicholas Kaufman, “Shein, Temu, and Chinese e-Commerce,” USCC Issues Brief, April 14, 2023, https://www.uscc.gov/sites/default/files/2023-04/Issue_Brief-Shein_Temu_and_Chinese_E-Commerce.pdf; “Temu,” BBC News, June 23, 2023, https://www.bbc.co.uk/news/business-65990529; Mark Hallam, “Germany Investigating Temu on Price-Fixing Suspicions,” DW.com, October 8, 2025, https://www.dw.com/en/germany-investigating-temu-on-price-fixing-suspicions/a-74279602; Helen Reid, “Shein’s Fast-Fashion Fight in France Goes Up a Gear with Sex Doll Scandal,” Reuters, November 4, 2025, https://www.reuters.com/business/retail-consumer/inside-sheins-fast-fashion-fight-france-2025-11-04; and Helen Reid, “France Says EU Must Investigate Shein over Sex Dolls, Weapons,” Reuters, November 6, 2025, https://www.reuters.com/business/retail-consumer/france-ramps-up-pressure-eu-investigate-shein-over-sex-dolls-weapons-2025-11-06.

[2] Dominika Urhová, “The Cost of ‘Shopping Like a Billionaire,” January 30, 2025, https://chinaobservers.eu/the-cost-of-shopping-like-a-billionaire.

[3] Henry Foy and Andy Bounds, “Brussels Aims to Speed Up Crackdown on Cheap Chinese Parcels,” Financial Times, November 12, 2025, https://www.ft.com/content/03c34c4f-e1ae-4852-8267-23f148da4716.

[4] Ibid.

[5] Madoka Kitamatsu, “France Moves to Suspend Shein Over Sex Dolls, Weapons as Paris Store Opens,” Nikkei Asia, November 5, 2025, https://asia.nikkei.com/business/retail/france-moves-to-suspend-shein-over-sex-dolls-weapons-as-paris-store-opens.

[6] Zhang Weilan, “EU’s Reported Parcel Crackdown Plan a ‘Unilateral Move’ Shifting Burden to its Own Consumers,” Global Times, November 13, 2025, https://www.globaltimes.cn/page/202511/1348090.shtml.

[7] Taizo Wada, Satoshi Tezuka, and Masahisa Tanaka, “Japan Weighs Taxing Low-Value Imports through Temu, Shein,” Nikkei Asia, November 26, 2025, https://asia.nikkei.com/economy/japan-weighs-taxing-low-value-imports-through-temu-shein.

[8] “Indonesia asks Apple, Google to Block China’s Temu to Protect Small Merchants,” Reuters, October 13, 2024, https://www.reuters.com/business/retail-consumer/indonesia-asks-apple-google-block-chinas-temu-protect-small-merchants-2024-10-11.

[9] Reid, “Shein’s Fast-Fashion Fight in France Goes Up a Gear with Sex Doll Scandal.”  On the non-imposition of the ban, see “France Lets Shein Operate after Sex Dolls, Weapons are Withdrawn,” Nikkei Asia, November 7, 2025, https://asia.nikkei.com/business/retail/france-lets-shein-operate-after-sex-dolls-weapons-are-withdrawn.

[10] Reid, “France Says EU Must Investigate Shein over Sex Dolls, Weapons.”

[11] Eliza Gkritsi, “EU Probes Shein over Sale of Child-Like Sex Dolls and Weapons,” Politico, November 26, 2025, https://www.politico.eu/article/commission-probes-shein-over-sale-of-illegal-goods.