In Depth: How China’s E-Commerce Titans Are Squeezing Global Rivals

Lured by ultra-low prices and free shipping for orders as low as $10, global shoppers are flocking to four Chinese e-commerce platforms: Shein, Temu, AliExpress, and TikTok Shop. [para. 1] Dubbed the “four little dragons” for their rapid growth, these platforms have reshaped online shopping by connecting consumers directly to China’s manufacturing power. This rise has prompted scrutiny from foreign regulators and competitors, including Amazon. [para. 2]

In 2022, Temu and Shein were the top two shopping apps globally in downloads, while AliExpress ranked third and fourth. TikTok was the most downloaded social media app, amassing over 1 billion monthly active users. [para. 3] Shein became the third-largest online fashion retailer in the U.S., present in over 150 countries. Launched in the U.S. in September 2022, Temu expanded to 66 countries, overtaking eBay in Europe. [para. 4] In 2023, these platforms accumulated over $100 billion in gross merchandise value (GMV): AliExpress at $40 billion, Shein at $36.5 billion, Temu at $16.5 billion, and TikTok Shop at $13.6 billion. [para. 5] HSBC projects China’s cross-border e-commerce market will reach $500 billion by 2025, with this quartet leading the way. [para. 6]

The platforms achieved success by making online shopping faster and cheaper through price wars, efficient management, and flexible manufacturing. [para. 7] Temu requires suppliers to offer the lowest prices, while Shein leverages an agile supply chain for quick product launches. [para. 8][para. 9] Temu's “full-consignment” model, where the platform handles everything from marketing to fulfillment, has been emulated by its peers. [para. 10] The “semi-consignment” model further allows merchants to manage their own logistics, speeding up fulfillment and enabling the sale of larger items. [para. 13]

Amazon, feeling the competition, launched an interactive shopping channel in April 2023 and reduced commission rates to compete with Shein and Temu’s lower prices. [para. 22] Despite the competition, Amazon held a 39.6% market share in the U.S. in 2023, expected to grow to 40.9% by 2025. [para. 26] Experts argue the impact of the “four little dragons” on Amazon is exaggerated, as the U.S. e-commerce market still has growth potential. [para. 28]

However, as these Chinese platforms advance in the U.S., they face increasing regulatory risks. Lawmakers are pushing for measures against ultra-cheap Chinese imports to protect local businesses, illustrated by the closure of 99 Cents Only Stores. [para. 31] Some platforms exploit the U.S.’ “de minimis” rule, allowing duty-free imports under $800, prompting crackdowns on small package shipments. [para. 34]

Temu and Shein possibly account for over 30% of all de minimis packages to the U.S., contributing to regulatory targeting. [para. 35] They must address supply chain and intellectual property issues to adhere to U.S. and EU standards, with Temu reducing its U.S. market weight to mitigate risks. [para. 37] The most significant threat is potential market bans, as seen when President Biden signed a bill requiring TikTok’s parent company to divest or cease operations in the U.S. [para. 40] This ban could hurt other e-commerce players like Temu and Shein. [para. 42] Overall, U.S. politics exhibits a general unfriendliness towards Chinese companies, reflecting broader geopolitical tensions. [para. 44]