Most of the Chinese e-shops, as we know them today, started to emerge at the beginning of the new millennium. However, they only started to penetrate the international and European market a little later. One of the first was Ebay, which, although not a Chinese retailer, allowed Chinese sellers to easily export goods to Europe. It started operating in the Czech market in the 1990s, but only gained popularity in the first years of the 21st century. Aliexpress soon followed suit. Both e-shops offer a very wide range of goods. Their offer includes virtually every product category you can imagine, from clothing to electronics to collectibles.
A little later (around 2015), Shein also joined the fray, which, unlike Ebay and Aliexpress, focuses primarily on selling clothing that matches the latest trends. Last year and this year, perhaps everyone noticed the new Chinese e-shop Temu, which penetrated the Czech market really dramatically and absolutely dominated the world of advertising.
The Czechs can’t compete, but for good reasons
One of the main attractions of these stores is their ability to offer goods at significantly lower prices than traditional retailers. In addition, they also provide access to a huge variety of products from different categories, allowing customers to find almost anything they are looking for in one place. Last but not least, aggressive marketing strategies are also behind their huge expansion.
Small businesses can’t compete with this, but for good reasons. First and foremost, cheap labor and terrible working conditions are behind the low price of goods. Child or forced labour bordering on slavery is no exception. In addition, these companies also do not comply with extensive rules on environmental protection and product safety, which will also have a significant impact on the final price. Finally, the quality of the goods should also be mentioned. This is absolutely incomparable to honest domestic production.
They are no strangers to illegal practices
Businesses operating in the local market have to comply with a number of rules that do not apply to Chinese e-shops. This puts them at a huge disadvantage, as compliance costs money and effort. One of the biggest problems is intellectual property theft. Imagine investing hours of time, effort and money in developing a new product. You take out a patent or trademark and think your product is safe. Unfortunately, this may not be the case.
Chinese e-shops usually don’t take these laws into account, so you may one day come across a product that looks suspiciously similar to yours on a similar online shop. The difference is that it costs a tenth of the price and you are no longer competitive.
Unfortunately, this is not uncommon, with fashion, furniture designs and art being stolen. Small entrepreneurs are the biggest victims. Shein, for example, is currently facing charges for systematically seeking out popular designs and then stealing and selling them for significantly lower sums, but also in significantly lower quality.
In some cases, particularly with regard to the new Temu e-shop, we can also talk about unfair competition. Especially in terms of misleading advertising. In fact, Temu does not indicate the ingredients of its products and the photos often do not correspond to the appearance of the real product.
Moreover, in its aggressive marketing campaign, Temu targeted directly the advertisements of Czech brands. Thus, if you wanted to search for a Czech e-shop, the first thing that popped up was an advertisement for Temu and similar products. Temu also directly parasitized Czech retailers by using their brand names as keywords. Specific victims included the Ovečkárna e-shop selling sheep wool products or the Vuch brand.
Misleading advertising harms not only consumers themselves, who do not get what they expect, but also Czech retailers. They cannot compete with such advertising, otherwise they would have to commit unfair competition themselves. However, they would hardly get away with it on the local market.
In the case of Temu’s e-shop, it is also very problematic to manipulate the customer with a limited time or quantity offer, which is not actually limited. Also unclear is the system of discounts that disguises the original prices.
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However, intellectual property theft and unfair competition are not the only illegal practices of Chinese e-shops. Another major problem is so-called dumping. This is a business practice in which a company sells goods abroad for less than their normal value in the domestic market. The main aim of this practice is to gain market share in a foreign country and to eliminate competitors. And this practice is one of the reasons why goods are so cheap on the increasingly popular Temu e-shop. Temu is currently losing money in the foreign market in order to offer absolutely unbeatable prices and knock out the competition.
As a result, domestic companies are no longer able to compete and are losing market share. Chinese e-commerceis thus leading to the liquidation of small businesses, but in the future it may also cripple the entire economy. Overall revenues may be reduced, jobs may be lost and entire industries may be devalued.
Dumping is considered an unfair trade practice and, for example, the World Trade Organisation, of which we are a part, allows countries that are damaged by dumping to impose anti-dumping duties on imports to prevent damage to their domestic market. So the question is – why is nobody doing anything about it?
Europe is starting to fight back
Fortunately, it looks like the time of inaction is over and countries are slowly starting to fight back against the unfair practices of Chinese e-commerce. One of the first swallows was a bill against fast fashion in France.
Fast fashion is a term used to describe the rapid and frequent updating of fashion collections to keep them in line with the latest trends at a low cost. However, this fast fashion is harmful in many ways – clothes are made virtually disposable, creating a lot of waste and a huge negative ecological impact. Shein and Temu, on the other hand, are among the so-called ultra fast fashion e-shops that are even more harmful.
The French law proposes the introduction of charges for the purchase of ultra fast fashion goods of up to €10 per item and a ban on advertising promoting these goods.
And it looks like the European Union is not going to be left behind. Last week, the European Commission approved the inclusion of Shein among the very large online platforms defined by the Digital Services Act, In practice, this means that it will be subject to the strictest rules under the act. Shein will have to comply within four months, by the end of August this year.
Shein will thus have to keep a close eye on illegal products, especially in terms of counterfeit goods infringing intellectual property rights and dangerous products and items. Emphasis is also placed on consumer protection, especially for underage consumers. Shein will also have to comply with new rules on greater transparency and control by the EU.
It can therefore be concluded that the protection of small entrepreneurs is looking bright and we can only hope that the EU, and perhaps the Czech Republic itself, will take inspiration from the French approach and regulate Chinese e-shops and their harmful ultra-fast fashion even more.
