EU regulators have raided Temu’s headquarters in Dublin, investigating a possible violation of the foreign subsidy regulations.
The Chinese online retailer, already in the focus of the European Commission due to its alleged inability to prevent the illegal content being sold on its app and website, was raided in an unannounced action, without any further publicity, last week.
A spokesperson of a commission stated on Thursday that “We can confirm that the commission has carried out an unannounced inspection at the premises of a company active in the e-commerce sector in the EU, under the foreign subsidies regulation.”
Meanwhile, its headquarters is situated on St Stephen’s Green, one of Dublin’s most prestigious addresses. The five-star Shelbourne hotel and Cantor Fitzgerald are some of the nearest neighbours and are a US finance company, respectively.
The foreign subsidies regulation of the EU applies to companies that were considered to have received a competitive advantage in the form of government subsidies.
The EU introduced up to 38 percent tariffs last year on a group of Chinese car manufacturers after a protracted investigation under the rules of the World Trade Organization.
It came to an end that the companies were being subsidized directly and indirectly by the Chinese government, including assistance in shipping cars to Europe and in securing land for factories.
Temu, with approximately 116 million monthly users in the EU, states that it gives consumers a chance to “shop like a billionaire” by connecting them with “millions of sellers, manufacturers, and brands with the mission to empower them to live a better life.”
However, the commission initiated an inquiry into Temu in its 2022 Digital Services Act, which regulates online platforms. The officials indicated that preliminary investigations revealed in July that Temu was not doing enough to curb illegal products being sold.
A spokesperson of Temu said that “Temu takes product safety and compliance very seriously. We have a system of seller vetting, proactive monitoring, and responsive takedowns to prevent, detect, and remove unsafe products.”
There are increasing concerns regarding the trade relationship between the EU and China, and the numbers last month indicated that Germany had surpassed its previous record and imported more than it was exporting first time to China.
The extent of the imbalance was evident this week, indicating that China’s global exports in the first 11 months of the year had outpaced imports by more than $1tn (£750bn).
Much of that excess was created through shipments to the EU, which in turn had an even bigger trade deficit to China last year of above $350 billion.
Manufacturers in China are believed to have been shifting more of their goods to non-US markets as a response to US tariffs, to drive an export boom into Europe, Australia, and Southeast Asia.
