Hundreds of Chinese suppliers on Temu, the overseas shopping app run by PDD Holdings, staged a protest at the e-commerce giant's office in Guangzhou, alleging unreasonable platform policies, according to merchants and local Chinese media reports.
Dozens of protesters stormed the PDD office on Monday afternoon, according to video clips posted on social media and confirmed as authentic by merchants. The Chinese media outlet, Yi Magazine, reported on Tuesday that about 80 merchants entered the PDD office on Monday, but left after police intervened.
It is not the first time merchants have protested against Temu. In a statement issued on Tuesday, the company said that "a group of merchants gathered at the office of a Temu logistics affiliate in Guangzhou" recently.
Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.
"They were unhappy with how Temu handled after-sales issues related to the quality and compliance of their products, disputing an amount worth several million yuan," the statement said, without referencing the July 29 protest.
A page from the Temu website is seen in this photo taken June 23, 2023, in New York. Photo: AP alt=A page from the Temu website is seen in this photo taken June 23, 2023, in New York. Photo: AP>
"These merchants have declined to resolve the disputes through the normal arbitration and legal channels stated in the seller agreements. The situation is stable, and the company is actively working with the merchants to find a solution," Temu said
PDD's stock price lost 2.5 per cent in New York overnight.
The actions by Chinese suppliers could add to the uncertainty around Temu, which is facing other risk factors such as strict import duties imposed by the US and European Union. Temu competes against Shein and TikTok Shop, as well as Alibaba Group Holding's AliExpress, in selling made-in-China products directly to overseas buyers. Alibaba owns the South China Morning Post.
Temu is expanding its sales outreach to consumers in the US and other overseas markets, offering products such as US$6.92 dresses and US$3.99 sandals. But many Chinese suppliers complain that the platform has set harsh terms, including hefty "fines" if customers complain or request refunds. Temu allows consumers to keep refunded items due to the high cost of cross-border logistics, but some merchants said they have not received any reimbursement in these cases.
One Guangzhou-based merchant, who did not attend the protest on Monday, said he was told about the incident by his peers, adding that he regarded himself as a "victim" of Temu's policies. The merchant, who declined to be identified, said he had 40 million yuan (US$5.5 million) turnover on the platform last year, but Temu deducted a "fine" of 3 million yuan due to customer refunds and complaints, which wiped out almost all his profits.
The Temu logo is seen on a mobile phone displayed in front of its website, in this illustration picture taken April 26, 2023. Photo: Reuters alt=The Temu logo is seen on a mobile phone displayed in front of its website, in this illustration picture taken April 26, 2023. Photo: Reuters>
The merchant said when a post-sale issue arises, Temu gives a refund to customers and lets them keep the product, while fining the seller at over double the price for the after-sale problem. He noted that as sales increased, fines also rose. He does not see much chance of getting his money back.
A second merchant, who also declined to be identified, said PDD is yet to provide a solution for the merchants' complaints. In his case, he sold about 800,000 yuan worth of products on Temu, but the platform has withheld around 300,000 yuan for fines and refunds.
A Shenzhen-based mobile phone seller said he had incurred losses of around US$80,000 on Temu, including fines and unpaid funds for sold products. In addition, the merchant said he suffered a loss equivalent to around 200 units of smartphones due to Temu's no-return refund policy, and he is still waiting for this money. The merchant noted that Temu can fine merchants up to five times the product's sales value.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2024 South China Morning Post Publishers Ltd. All rights reserved.
Copyright (c) 2024. South China Morning Post Publishers Ltd. All rights reserved.