China’s Temu Vendors Protest Over Penalty Policy

Hundreds of Chinese sellers on Temu, an e-commerce platform owned by PDD Holdings, have protested against what they describe as unbearably high penalties imposed by the company. One of the protesting merchants shared this information with Reuters, highlighting the intense price competition with low-cost rival Shein.

Temu, launched in September 2022, has grown in popularity due to its rock-bottom prices on a wide variety of products, many of which are made in China. This growth has intensified competition with other e-commerce giants such as Shein and Amazon in the United States and other markets.

A garment merchant from Guangzhou explained that Temu introduced new penalties in April, which can amount to up to five times the value of a sale when customers return their purchases for a refund. “I’m fine if I must refund consumers… What vendors want is for Temu to stop fining us without a reason,” the 25-year-old seller said, adding she went to Temu’s headquarters in Guangzhou on Monday to protest.

To address the situation, Temu advised vendors to register the fines they need to pay, but no further actions were taken. Consequently, more vendors gathered on July 29, with about 400 to 500 participants. Videos circulating online also showed what appeared to be hundreds of protesters outside the building.

Temu stated that most of the protesters were garment sellers who also operate on Shein and that it is actively working with the merchants to find a solution. “These merchants have declined to resolve the disputes through the normal arbitration and legal channels stated in the seller agreements,” the statement said, adding that the merchants were unhappy with how Temu handled after-sales issues related to the quality and compliance of their products.

The garment merchant reported that many vendors have gone bankrupt or closed since Temu started the practice, which includes fines for various issues such as wrong clothing sizes. “I’m a small seller. My estimate was I would need to pay a fine of 110,000 yuan ($15,231), but when I got the number, it was 290,000 yuan,” she said, adding her items sell at just 20 or 30 yuan each, and she was not yet making enough profit to pay her fines.

Penny, another vendor from Guangzhou who protested on Monday, said she can’t quit Temu. “I can’t simply quit Temu because I have workers to pay and clothes worth several million yuan in the warehouse. I have no way out,” she said.

Temu emphasized that the majority of its merchants experience success under its guidelines, reporting increased sales and positive customer feedback. “While penalties are necessary to maintain a high-quality marketplace, we are committed to fair enforcement and dispute resolution,” it stated.

*China Now, keep you updated on China

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