Chinese-founded budget e-commerce platforms Temu and Shein have been increasing their presence in European markets as their sales decline sharply in the United States.
Consumer spending on Temu in the US fell by approximately 36% in May compared to the previous year, while Shein’s spending dropped by 13%, according to data from Consumer Edge.
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Despite this growth opportunity in Europe, experts warn that both companies face mounting regulatory scrutiny similar to that encountered in the US.
European sales growth contrasts with us decline
As US tariffs and trade policies have taken effect—such as the May end to a small-package tariff exemption and new duties as high as 54%—Temu and Shein have shifted their strategy towards European countries.
Consumer Edge’s data indicates that consumer spending on these platforms grew significantly in Europe in May, with Temu’s sales rising by 63% in the EU and 38% in the UK year-over-year. Shein also saw increases of 19% in the EU and 42% in the UK.
France, Europe’s second-largest economy, emerged as a key market, especially for Temu.
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By GlobalDataThis European growth has been accompanied by increased advertising investments and efforts to expand warehouse capacity. Both companies are experimenting with localised business models to better adapt to the region’s consumer preferences.
However, Europe enforces stricter regulations on product safety, consumer protection, and competition, which require additional compliance and transparency efforts.
Regulatory pressures mount in the EU and UK
Despite their expansion, Temu and Shein face intensifying regulatory challenges in Europe. The European Union is preparing to introduce a two-euro flat customs fee on low-value packages from online marketplaces, which previously entered duty-free.
Industry experts describe this move as a strategic effort to regulate the rapid growth of ultra-cheap cross-border e-commerce and foresee significant impacts on the platforms’ operations over the coming years.
Further regulatory pressure comes from consumer advocacy groups and government bodies.
The pan-European organisation BEUC has filed complaints against both companies, accusing them of employing deceptive marketing tactics known as “dark patterns” that encourage overconsumption.
The European Commission is also investigating Shein’s adherence to EU consumer protection laws. Meanwhile, France is considering legislation specifically targeting ultra-cheap fast fashion products for their environmental impact.
Human rights and labour concerns add to challenges
Beyond commercial regulations, Temu and Shein face scrutiny over labour practices and human rights compliance.
US authorities have challenged Temu over alleged breaches of the Uyghur Forced Labor Prevention Act, which bans imports made with forced labour from China’s Xinjiang region.
Europe is advancing stricter oversight through the Corporate Sustainability Due Diligence Directive, requiring companies to address human rights abuses and environmental impacts within their supply chains.
Analysts highlight that the rising global protectionism and differing standards on labour and sustainability are significant factors behind the growing regulatory hurdles.
While Europe presents valuable growth opportunities, compliance with these evolving legal frameworks will be crucial for Temu and Shein’s continued expansion in the region.
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