It faces an uncertain future as its parent company loses $50 billion

Ago, the Chinese retailer that has enjoyed huge success over the past few years is now within the face of an uncertain future after its parent company lost $50 billion virtually overnight. It faces increased regulatory scrutiny from several governments, as well as competition from other Chinese fast-fashion retailers.

According to , PPD Holdings fell 30% on August 26 after a worrying report indicated its rapid growth could soon come to an end.

“Looking ahead, revenue growth will inevitably come under pressure due to intensifying competition and external challenges,” Jun Liu, CFO of PDD Holdings, said in a press release. “Profitability will likely…also be affected as we continue to invest resolutely.”

The stiffer competition Liu mentioned will are available the shape of Tik-Tok Shop and its competitor Shien, as well as the planned Amazon budget store. In terms of external challenges, Temu has faced scrutiny for exploiting import trade loopholes, questions on the standard and origin of its products, its adherence to product safety rules, and questions on whether it sells products made by forced labor from several governments.

To that end, bipartisan laws has been passed to shut the “de minimis” trade loophole. proposed earlier in Augustbecause of which Temu avoids customs checks and import taxes, as shipments to customers are often cheaper and value lower than $800.

According to , although representatives for Shien and Temu didn’t reply to a request for comment on the laws, Donald Tang, executive chairman of Shien, called for “de minimis” reforms via a 2023 letter to the American Apparel and Footwear Association.

“Shein believes the de minimis framework should be reformed to create a more level, transparent playing field—one in which all retailers play by the same rules, and those rules are applied evenly and uniformly, regardless of where a company is headquartered or ships from,” Tang wrote.

In February, Sen. Sherrod Brown (D-OH) and Sen. Rick Scott (R-FL) called on President Joe Biden to make use of his executive authority to shut this particular trade loophole within the name of helping American manufacturers.

According to the press release Brown’s office, the senators wrote: “The Chinese Communist Party (CCP) — one of the worst violators of human rights and trade — directly benefits from duty-free access to the U.S. market for shipments under $800. This generous gift is not tied to any requirements for rules of origin, reciprocal market access, or labor or environmental standards. Simply put, the CCP and other organizations exploiting the de minimis are able to enrich themselves while avoiding accountability for a range of trade violations that undermine American manufacturing, harm American workers, and accelerate the flow of fentanyl and other harmful goods into our communities.”

The senators continued: “The existence of this loophole in U.S. policy unfairly benefits foreign companies and foreign e-commerce platforms like Temu, SHEIN, and AliExpress by allowing them to avoid tariffs, duties, taxes, and other U.S. customs laws and regulations that U.S. businesses and brick-and-mortar stores must comply with. There are no consequences for these actions because they are currently legal under the outdated and convoluted ‘de minimis’ loophole.”

However, similar to panic amongst lawmakers in China and Tik-Tok When it involves data use, a few of these concerns overlook the incontrovertible fact that American firms are also exploiting this loophole for their very own purposes, just as American firms like Google often carelessly use consumer data to their very own advantage.

As Jason Goldberger, chief business strategy officer at Publicis Groupe, said, “There are no white hats or black hats in all of this. It’s all shades of gray.”