The European Union (EU) is considering imposing on inexpensive goods bought online through Chinese retailers like Alibaba Group Holding Limited's (NASDAQ:BABAF) rivals Shein and PDD Holdings' (NASDAQ:PDD) Temu.
What Happened: The European Commission is set to propose the abolition of the current 150 Euro ($161.39) threshold, which allows items to be bought duty-free, Financial Times reported on Wednesday. This proposal primarily targets Chinese online marketplaces Temu and AliExpress, and clothing retailer Shein, according to an official.
In 2023, the EU imported 2.3 billion items below the duty-free threshold, with e-commerce imports more than doubling year on year. The proposed changes would apply to any online retailer shipping to EU customers directly from outside the bloc.
The commission is also contemplating making it mandatory for large platforms to register for VAT payments online, irrespective of their value. These measures are being proposed in anticipation of the new commission, which will take office later this year.
However, achieving consensus among EU countries could be difficult, as the new regime would increase the workload of already overstretched customs officials. The number of dangerous products reported by EU countries surged more than 50% from 2022 to 2023, with cosmetics, toys, electrical appliances, and clothes among the products with the most safety issues.
Why It Matters: These regulatory hurdles in the EU come after Shein and Temu faced similar issues in the U.S. Shein confidentially filed for a London IPO amid struggles with its U.S. IPO filing.
In April, Temu was added to a list of tech giants which included Meta, Google, X, TikTok, to face increased scrutiny under the European Union's Digital Services Act (DSA). This happened after Temu hit 45 million users in Europe.
Furthermore, both companies are facing competition from Amazon.com, which is preparing to launch a new section on its shopping site targeting overseas consumers with affordable items shipped directly from warehouses in China.
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This story was generated using Benzinga Neuro and edited by Pooja Rajkumari