European regulators have launched a dawn raid on the Dublin headquarters of e-commerce giant Temu, marking a dramatic escalation in the trade war over cheap Chinese imports.
Officials from the European Commission conducted the unannounced inspection last week. The operation was driven by suspicions that the online retailer—a subsidiary of PDD Holdings—may be benefiting from unfair state subsidies granted by the Chinese government.
While the Commission declined to name the specific target, a spokesperson confirmed that an inspection took place at the premises of a company active in the e-commerce sector under the Foreign Subsidies Regulation (FSR).
Investigating Unfair Advantages
The raid utilizes the powerful Foreign Subsidies Regulation, a legal framework designed to stop non-EU companies from using foreign government aid to undercut European competitors.
Subsidies can take many forms, including:
- Zero-interest loans.
- Below-cost financing.
- Preferential tax breaks.
If found guilty of breaching these rules, the penalties are severe. The Commission has the power to impose fines of up to 10% of the company’s annual aggregated turnover.
The Flood of Cheap Goods
This regulatory strike occurs amid growing alarm in Brussels over the volume of low-cost goods flooding the single market.
Temu’s “Shop like a billionaire” slogan has attracted approximately 116 million monthly users in the EU since its launch in April 2023. Its model of selling everything from electronics to clothing at rock-bottom prices has forced competitors like Amazon to launch rival services.
However, European retailers argue that platforms like Temu and Shein exploit a customs loophole. Currently, parcels worth less than 150 euros are exempt from duty fees. The EU executive is reportedly planning to close this loophole by the end of next year to level the playing field.
A Pattern of Scrutiny
This is not Temu’s first clash with Brussels.
- Digital Services Act (DSA): Last year, the Commission opened a separate investigation into the platform.
- Illegal Products: In July, preliminary findings suggested Temu was not doing enough to prevent the sale of illegal goods on its marketplace.
Raids of this nature are typically triggered when regulators possess credible evidence of violations, often obtained through whistleblowers or internal intelligence.
The move also comes as China’s trade surplus topped $1 trillion in November. Manufacturers, facing tariffs in the US, are aggressively redirecting exports to Europe, further fueling tensions.
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