Temu and Shein are pivoting to Europe to take care of U.S. price lists. But they won’t get a heat welcome

Temu and Shein are pivoting to Europe as their trade within the U.S. takes a significant hit from unfavourable industry insurance policies. But the China-founded finances e-commerce apps won’t obtain a heat reception of their new goal markets. 

In contemporary weeks, court cases were filed towards Temu and Shein within the EU, accusing them of unsavory trade techniques. That comes because the bloc prepares a brand new two-euro flat charge on up to now customs-free small programs from on-line marketplaces like Temu and Shein. 

Experts say the brand new traits might be ominous indicators for the platforms, as their trade has already suffered from the closure of a small bundle tariff exemption within the United States, in addition to new tasks at 54% or $100 for the ones despatched during the postal carrier. 

“As regulatory and trade pressures intensify in the U.S., Temu and Shein are increasingly turning to Europe and the UK as critical growth markets,” Anand Kumar, affiliate director of analysis at Coresight Research, informed CNBC. 

However, Kumar stated that the corporations have begun to stand regulatory headwinds in Europe and the U.Okay. that echo the scrutiny they have got encountered within the U.S. 

“The EU’s proposed €2 customs fee is more than a minor surcharge—it’s a strategic regulatory move aimed at curbing the unchecked growth of ultra-cheap cross-border e-commerce, and it could reshape how platforms like Shein and Temu operate in Europe over the next 2–3 years,” he added. 

Temu and Shein have boosted their advert spending in Europe, in particular within the U.Okay. and France, in line with a file from Reuters, reflecting their shift clear of the U.S.

The rising significance of the EU and U.Okay. to the 2 firms has additionally been mirrored in information from Consumer Edge Research, which lines shopper tendencies according to a pattern of credit score and debit card information. 

According to the information it despatched to CNBC, Temu’s shopper spending within the U.S. fell about 36% in May from a 12 months previous, whilst Shein’s fell 13% over the similar duration. The corporate added that its information presentations that a few of Temu and Shein’s U.S. consumers have shifted their spending towards legacy division shops and rapid trend shops. 

Those tendencies coincide with information from marketplace intelligence company Sensor Tower appearing that app utilization of Temu and Shein within the U.S. is slowing considerably.

However, the other tendencies for the platforms have been noticed within the U.Okay. and EU. In May, year-over-year shopper spending expansion reached 63% within the EU and 38% within the U.Okay. Shein skilled expansion of 19% within the EU and 42% within the U.Okay. over the similar duration. 

For Temu, Consumer Edge information confirmed that expansion was once particularly pronounced in the important thing marketplace of France, Europe’s second-largest economic system.  

To capitalize at the momentum in Europe, Temu and Shein were aggressively increasing their operations around the area, together with ramping up warehouse capability, experimenting with localized trade fashions, in addition to considerably expanding virtual advert spending in key markets just like the U.Okay., France and Germany, in line with Coresight’s Kumar. 

“This expansion is not merely opportunistic—it signals a strategic shift in how these companies envision their next phase of growth,” he stated. 

“That said, the European market is not without its challenges. The region enforces stricter regulations on product safety, consumer protection, and fair competition, all of which require Temu and Shein to invest more in compliance and operational transparency,” he added. 

Experts say that the ones demanding situations and the EU’s doable tasks on small-value programs could also be indicators of extra pressures to come back for Temu and Shein. 

According to French native media, the wording of an “anti-fast fashion” invoice, which is below debate within the French National Assembly, was once just lately rewritten to unmarried out ultra-cheap platforms like Shein and Temu. 

The invoice, first licensed through France’s decrease space of parliament in March closing 12 months, seeks to penalize fast-fashion merchandise for his or her environmental have an effect on.

Meanwhile, on Thursday, the pan-European shopper group BEUC filed a grievance with the European Commission towards Shein over its use of misleading tactics, or “dark patterns” that purpose overconsumption. 

That comes after the European Commission introduced its personal investigation into Shein’s compliance with EU shopper legislation in February and, in May, advised Shein to admire EU shopper coverage rules. 

BEUC has additionally filed a grievance towards Temu, whilst 17 of its participants filed the similar grievance with their competent nationwide government, the gang stated. 

Xiaomeng Lu, director of geotechnology at Eurasia Group, informed CNBC that the newest scrutiny Temu and Shein are experiencing within the EU is harking back to that within the U.S. 

“[Temu and Shein] offer cost effective solutions and an efficient supply network that fare well in the fast moving fashion world. However their labor practices and human rights standards may not fully align with high value markets like the EU and U.S.,” Lu stated. 

That struggle and “rising protectionism” globally are the “key drivers of these regulatory reactions,” she added.

In the U.S., officers had additionally taken factor with Temu over its alleged non-compliance with the Uyghur Forced Labor Prevention Act (UFLPA), which prohibits the import of products made with pressured hard work from China’s Xinjiang area.

According to Coresight’s Kumar, Europe, for its phase, is progressing towards stricter oversight during the Corporate Sustainability Due Diligence Directive — which EU member states have till July 2026 to combine into their nationwide rules. 

The directive would compel firms working within the EU to spot and mitigate human rights abuses of their provide chains, expose environmental have an effect on and sustainability metrics and face prison penalties for failing to take good enough preventive steps.

That manner Temu and Shein will face stringent compliance calls for within the EU, Kumar stated. However, the area nonetheless gives significant alternatives for growth in an an increasing number of protectionist world industry surroundings, he added.