BUSINESS

Trump’s Tariffs Prompt Chinese E-Commerce Giants to Expand Beyond U.S.

By Bao Yunhong, Lv Yating and Denise Jia

Published: Feb. 19, 2025 3:43 a.m. GMT+8

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Application icons for PDD Holdings Inc.’s Temu, right, and Shein arranged on a smartphone. Photo: Bloomberg

Facing rising trade barriers and regulatory scrutiny in the United States and Europe, Chinese cross-border e-commerce platforms are scrambling to diversify their markets and reduce reliance on any single region.

On Feb. 1, U.S. President Donald Trump signed an executive order imposing a 10% tariff on all Chinese imports and ending duty-free treatment for small parcels from China. The U.S. Customs and Border Protection agency enforced the order on Feb. 3, requiring all Chinese goods, including those from Hong Kong, to be formally declared and taxed.

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Chinese e-commerce platforms like Temu and Shein are diversifying into Europe due to U.S. trade barriers, such as a 10% tariff imposed on Chinese imports in February 2023.
Europe offers strong purchasing power, projecting €958 billion in online sales by 2024, but presents regulatory challenges and high standards, requiring market-specific strategies.
European regulatory scrutiny is increasing, with actions like the Digital Services Act and investigations into practices of platforms like Temu and Shein, alongside concerns over low-value imports.

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Who’s Who

Temu: Temu, a Chinese cross-border e-commerce platform, is accelerating its expansion into European markets in response to rising trade barriers and regulatory scrutiny in the U.S. The company is intensifying merchant recruitment efforts in the U.K. and has launched operations in Spain and Ireland. In late 2024, the European Commission initiated investigations into Temu for potential violations of EU consumer protection laws, including selling illegal products and using manipulative marketing practices.

Shein: Shein, a fast fashion seller, has established Poland as its regional distribution hub, leasing significant warehouse space. While the U.S. remains its largest market, Shein's growth is increasingly driven by Europe. The company faces challenges navigating Europe's regulatory requirements and is under investigation by the European Commission for potential consumer protection law violations. Despite these hurdles, Europe offers attractive opportunities due to its purchasing power, with consumers showing a preference for competitive pricing.

Alibaba Group Holding Ltd.: Alibaba Group Holding Ltd. is focusing on expanding in Europe, launching the Miravia platform in Spain in December 2022 and securing sponsorship of the European Championship by 2024 through AliExpress. Its logistics arm, Cainiao, operates a courier network in Spain since 2021, offering next-day delivery across Spain and Portugal.

Miravia: Miravia is a platform launched by Alibaba Group Holding Ltd. in Spain in December 2022. It represents Alibaba's strategic push into the European market as part of its efforts to diversify away from reliance on the U.S. market amidst rising barriers. Miravia is part of Alibaba's broader expansion in Europe, which includes sponsorships and a strong logistics network through its Cainiao arm in Spain and Portugal.

AliExpress: AliExpress, part of Alibaba Group, is expanding its presence in Europe, having secured sponsorship of the European Championship by 2024. Its logistics arm, Cainiao, has established a strong network in Spain, providing next-day delivery. The company is classified as a Very Large Online Platform under the EU’s Digital Services Act, facing increased compliance obligations. AliExpress is also focusing on tailored market approaches to navigate Europe's complex regulatory landscape.

Cainiao: Cainiao, Alibaba's logistics arm, has established a strong presence in Spain since 2021, operating a courier network covering 46 provinces and offering next-day delivery across Spain and Portugal.

Mimacro: Mimacro is a Madrid-based provider of warehousing, logistics, and after-sales services for Chinese cross-border businesses in Europe. According to Zhan Qing, a manager at Mimacro, the company observes that European consumers are becoming more price-sensitive, particularly in markets like Spain where there is a growing preference for discounts and competitive pricing.

CJT Global: CJT Global is a cross-border compliance service provider mentioned in the context of navigating Europe's regulatory landscape. The company emphasizes the meticulous attention needed for compliance with Europe's stringent regulations, including taxation, data security, privacy, product certification, and environmental directives like the Extended Producer Responsibility directives.

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What Happened When

2021：: Cainiao, Alibaba's logistics arm, established a strong presence in Spain.

2022：: The EU's Digital Services Act imposed stricter oversight on Very Large Online Platforms.

December 2022：: Alibaba Group Holding Ltd. launched a new platform, Miravia, in Spain.

In 2023：: Shein established Poland as its regional distribution hub, leasing 600,000 square meters of warehouse space.

2024：: The European Commission is addressing concerns over the influx of low-value goods and is considering regulatory reforms.

By 2024：: Alibaba's cross-border platform, AliExpress, secured sponsorship of the European Championship.

Late 2024：: The European Commission initiated investigations into Temu and Shein for potential violations of EU consumer protection laws.

Feb. 1, 2025：: U.S. President Donald Trump signed an executive order imposing a 10% tariff on all Chinese imports and ending duty-free treatment for small parcels from China.

AI generated, for reference only