China-based discount shopping sites Shein and Temu required to provide information under EU Digital Services Act

By Dick Thomas Johnson

Amazon has long dominated the online shopping industry, but in recent years, China-based shopping sites Shein and Temu have expanded their market share around the world by leveraging their low prices. Meanwhile, the EU has announced that it has sent a formal Request for Information (RFI) to investigate whether the two companies are complying with the Digital Services Act (DSA) .

Commission requests information from online marketplaces Temu and Shein on compliance with the Digital Services Act | Shaping Europe's digital future
https://digital-strategy.ec.europa.eu/en/news/commission-requests-information-online-marketplaces-temu-and-shein-compliance-digital-services-act

Temu, Shein ordered to provide information on EU tech rules compliance by July 12 | Reuters
https://www.reuters.com/business/retail-consumer/temu-shein-ordered-provide-info-eu-tech-rules-compliance-by-july-12-2024-06-28/

Following raft of consumer complaints, Shein and Temu face early EU scrutiny of DSA compliance | TechCrunch
https://techcrunch.com/2024/06/28/following-raft-of-consumer-complaints-shein-and-temu-face-early-eu-scrutiny-of-dsa-compliance/

Shein, which originated in China, is a low-cost online shopping site for women's fashion, while Temu is an online shopping site for Chinese-made interior and home goods. Both companies have grown rapidly in countries around the world, including Japan, the United States, and European countries, by leveraging their low prices as an appealing point.

As their market share grew, the average number of monthly users of Shein and Temu in the EU exceeded 45 million, which is subject to the DSA. As a result, Shein was designated as a DSA target in April 2024 , and Temu in May .

As a result, the two companies will be required to take measures based on the DSA, such as combating illegal products, protecting minors, ensuring transparency in their recommendation systems, ensuring traceability of vendors, and compliance by design, and any violations will be subject to fines of up to 6% of annual sales.

On June 28th local time, the European Commission, the EU's executive body, announced that it had sent a DSA-based RFI to Shein and Temu. The request was based on a complaint from a consumer group, and the two companies must provide information by July 12th.

We have sent a request for information to Temu and Shein regarding their compliance with the Digital Services Act.

Both companies must provide the requested information by 12 July.

This request is also based on a complaint submitted by consumer organisations. #EUconsumers

— European Commission (@EU_Commission) June 28, 2024

'We would like to reiterate that we are committed to complying with all applicable laws and regulations in the markets in which we operate,' Temu told Reuters. A Shein spokesman added: 'We have received a request for information from the European Commission and are responding promptly.'

In the US market, Shein and Temu use a loophole that allows packages under $800 (approximately 129,000 yen) to be exempt from customs duties by shipping directly to consumers to avoid tariffs. Overseas media The Information reported that Amazon is also planning to use this loophole in its discount section, citing a person familiar with the matter.

Amazon's Bargain Store Would Use Same Trade 'Loophole' as Temu, Shein — The Information
https://www.theinformation.com/articles/amazons-bargain-store-would-use-same-trade-loophole-as-temu-shein