China’s ultracheap e-commerce app, Temu, took the world by storm, topping download charts in 2023 and 2024. Now, the very tactics that fueled its rise are becoming its biggest problem.
On January 21, Turkish competition authorities raided Temu’s office in Istanbul, as part of an antitrust investigation. This was just weeks after European Union regulators raided Temu’s headquarters in Dublin, probing whether the company benefits from unfair Chinese state subsidies. In Poland, regulators have fined Temu for misleading discount advertisements, accusing the platform of inflating reference prices to exaggerate savings.
Temu’s unique business model — cheap goods delivered from China straight to buyers at factory-direct prices with free shipping — has brought the company under fire. The regulatory pushback marks a turning point for one of China’s most aggressive global exporters.
“Temu’s original ‘China-to-door’ model was a brilliant, but ultimately fragile, strategy built on regulatory arbitrage,” Ashley Dudarenok, founder of China research and digital transformation firm ChoZan, told Rest of World. “That era is coming to a close. The model is now undergoing a forced, rapid evolution into a localized cross-border hybrid. Its survival depends entirely on how quickly it can execute this complex transition while navigating a minefield of regulatory and financial pressures.”
Founded by China’s PDD Holdings, Temu launched internationally in late 2022 and quickly gained traction by combining ultralow prices, aggressive marketing, and gamified referral incentives to attract users, especially in the U.S. Temu’s tactics, which had earlier helped its parent company succeed in China, led to explosive adoption globally. The global growth of platforms like Temu drastically elevated the status of cheap made-in-China goods.
“In the ’90s, [Chinese] manufacturers saw themselves as mere suppliers at the lower echelons of the value chain,” Yao Kaifei, founder of e-commerce startup BrandAI, told Rest of World in November 2023. “But the sales channels provided by the new apps give them access to consumers almost anywhere, spawning global aspirations.”
The recent speedbumps have, however, started weighing on Temu and may impact other Chinese e-commerce platforms like Shein, which have aggressively expanded globally in recent years.
Since November 2025, PDD Holdings’ shares have fallen by roughly 30%, as revenue growth slowed to single digits — a stark shift for a company long defined by hypergrowth. The slowing pace reportedly signals that the era of effortless, high‑velocity growth might be over.
The pressure on Temu is likely to intensify further as some governments are erecting guardrails to protect their local industries.
In July, the EU will end its duty-free allowance on parcels under 150 euros ($176), an initiative that has somewhat facilitated the massive growth of platforms like Temu and Shein. Earlier this month, the Turkish government scrapped its duty-free allowance on imports up to 30 euros, saying it would help protect local production and competition. Temu and Shein have suspended sales in the country for now.
In 2024, the EU started enforcing the Digital Services Act, which aims to make very large online platforms more accountable, transparent, and safe.
While Temu is still growing in Europe overall, in its top-tier markets, the share of online shoppers who have purchased from the platform has largely remained flat. The adoption growth rate in the Netherlands, for instance, has dropped.
Pressure is also mounting at home.
In China, regulators have intensified scrutiny over PDD Holdings, adding to investor unease. They have investigated the company over its rollback of the mandatory refund-without-returns policy, tax reporting violations, and widespread merchant protests over harsh platform penalties.
Temu, meanwhile, has managed to irk its customers in some markets.
In South Africa, angry customers flooded social media with complaints about delayed deliveries, unresponsive couriers, and unresolved refunds, prompting calls for boycotts. The country’s Department of Trade, Industry and Competition has publicly warned Temu and other foreign e-commerce platforms to comply with local consumer and competition laws, following concerns that the company misrepresented aspects of its local presence. Local retailers have also accused Temu of exploiting import tax loopholes to undercut domestic businesses. In Nigeria, early adopters have raised concerns about product quality and misleading promotions.
The broader question is whether Temu can adapt without losing what made it competitive. Tighter compliance would reduce regulatory risk but also take away Temu’s price advantage. The trade-off strikes at the heart of the cheap Chinese export model that Temu represents.
