There is no guarantee that the shifts did succeed in what could be the next stage of America’s plan to separate from China, but Chinese e-commerce platforms Shein, Temu, and TikTok Shop are rapidly changing their organization strategies to avert US market bans.
According to research and brokerage firm AB Bernstein, a New York-based research and consulting firm, the three Chinese companies ‘ combined market share in the US is currently at 3 %, and it may increase to 5 % by the end of the year.
The political legal ploy is taking on various forms.
The Protecting Americans from Foreign Adversary Controlled Applications Act, an online store operated by the video-sharing system TikTok, is currently facing increased attention from Instagram’s Clips, which are intended to make more money off of film authors ‘ creation.  ,
American lawmakers have also accused Shein and Temu of failing to ensure that their supply chains adhere to Beijing’s Uighur Forced Labor Prevention Act ( UFLPA ), which was passed in June to punish Beijing’s ongoing rights abuses of the Muslim minority group in the western Xinjiang region.  ,
Chinese e-commerce companies have also been accused of abusing the de-minimis rule, which exempts shipments worth less than US$ 800 from US customs inspection and taxes, by sending packages to the US directly from Chinese ports.  ,
The Biden administration should investigate Shein and Temu over concerns about data privacy violations, according to US lawmakers.
” To avoid a ban, Temu has shied- away a little bit from the US market. In a webinar with The Information, a San Francisco-based business publication with a focus on technology, Mark Shmulik, AB Berstein senior analyst covering the US online market, said that they have not been as aggressive as we have seen them last year. Temu is now concentrating more on Southeast Asian, Mexican, and European markets.
He added that Shein and Temu also try to establish local warehousing and begin training local sellers. They are attempting to obstruct the US government’s ability to impose the UFLPA or change the de-minimis rule.
Shmulik added that it’s not clear whether a similar localization strategy will benefit the two businesses because it could cause their current price advantage to decline.
” It’s hard for them to say’ We’re increasing prices because we’re diversifying selection and delivering goods quicker,'” he said. ” These are not their value proposition”.
According to Shmulik,” when the US consumers start to see the price gap between purchasing a particular good on Temu or Shein and Amazon to narrow, their engagement and excitement about participating and continuing to increase their wallet shipments there will decrease.”
Shop like a billionaire.
Last year, Shein was the most downloaded app in the US market’s fashion and beauty app segment, registering more than 35 million downloads. Following them, Poshmark and Nike had about 10 million downloads, and Nike had 15.2 million.  ,
Last year, Temu was the most downloaded iPhone app in the US with 103 million downloads, according to Appfigures. It was followed by TikTok with 52 million and TikTok’s video- editing app CapCut.  ,
Temu’s rise was reportedly brought on by the company’s alleged$ 7 million investment in a 30-second TV commercial during the Super Bowl in February 2023 to market to US consumers under the slogan” Shop like a billionaire.” It ran a similar Super Bowl ad in February of this year.  ,
Temu and Shein are creating empires in the shadow of the de-minimis loophole in US import regulations, according to a report released in June by the US House Select Committee on the Chinese Communist Party.
Nearly half of all de-minimis shipments to the US from China were made up of the two companies, according to the report. Additionally, according to the report, Temu failed to implement a compliance system or conduct any audits to confirm and verify compliance with the UFLPA.
The US-China Economic and Security Review Commission stated in a report released on April 14 that some of Shein’s products pose health risks and environmental risks. Shein and a number of other Chinese fast fashion companies are accused of and sued for intellectual property ( IP ) rights violations numerous times.
It’s difficult for the US government to ban Shein and Temu because of recent press reports from US officials and lawmakers highlighting China’s alleged industrial overcapacity and government subsidies, according to analyst Shmulik.  ,
Because many of their products are produced in the exact same facility as those on Amazon, he said,” It’s very difficult to ban Shein and Temu for something that is n’t tied to the supply chain, but rather to pricing tactics and subsidization.” The US government ca n’t be harsh on Chinese businesses alone, saying,” We ca n’t ignore other countries.”
” The best tool is the UFLPA”, he said. A law that is “very company-specific” will be effective if you can demonstrate some of the violations of it. That is how you can promote US laws.
He added that the TikTok ban bill, which is an exception, is extremely difficult to pass in the US these days.  ,
Fate of TikTok
The US House passed the Protecting Americans from Foreign Adversary Controlled Applications Act in March, which mandates that ByteDance sell TikTok to a US-based business within a year in order for the social media app to be completely banned from American app stores.
He Yadong, a spokesperson for the Chinese Commerce Ministry, stated that the US government should sincerely respect the market economy and the principle of fair competition and provide businesses from all nations with an open, fair, just, and non-discriminatory environment.  ,
Joe Biden, the president of the United States, signed the Act into law on April 24.
According to The Information, ByteDance is looking into potential deals to sell a majority stake in TikTok’s US business internally, likely without the TikTok user recommendation algorithm, as it was reported on April 25.  ,
ByteDance, however, denied the report and stated that it intends to file a lawsuit against the new US law on grounds of the First Amendment.  ,
” When you touch on the First Amendment, it’s unclear how things will play out”, Shmulik said. According to what we’ve heard, ByteDance does n’t intend to divest TikTok, especially with the algorithm.
TikTok can continue to grow if it can learn from Instagram Reels ‘ algorithm, despite the passing of the law and a potential change in its ownership.
” If I am following a creator on Instagram, I am almost]certainly ] going to see videos from that creator”, he said. Reels is a better place for creators to monetize their follower ships than TikTok, according to the statement.
He claimed that TikTok will eventually realize this and adjust, and that it will only take a few more months before it can create a flow that is comparable to Reels’. He added that there is room for growth for new players because the US e-commerce market is so highly fragmented.
Shmulik argued that the rise of Chinese e-commerce companies will not hurt the bottom lines of important American companies like Amazon and Walmart but may put pressure on margins for smaller ones like Etsy.
According to Statista.com, Amazon had an e- commerce market share of 37.6 % in the US last year, followed by Walmart ( 6.4 % ), Apple ( 3.6 % ) and eBay ( 3 % ).
Read: US complains China hurts shipbuilding, steel firms
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