Hundreds of furious merchants thronged the Guangzhou office of the e-commerce platform, Temu in July, protesting fines and refund policies that they have said were destroying small merchants’ profits.
Chinese outlet, Yicai had reported that 80 merchants had assembled on the 30th floor of the Guangzhou office building on Monday, with some of them gaining entry to the company premises. Temu is operated by PDD Holdings, a company that also runs the local online retail platform, Pinduoduo.
A lot of the protesters run small businesses on Temu, a platform that popularly sells Chinese products that gained popularity in the West due to its lower prices.
Yicai also reported on how employees were told to stop working after the protesters entered the office but that the merchants left after the police arrived. According to the outlet, they had sought to confront the company’s top executives but had failed to secure a meeting with them.
Several local news outlets have reported that about 300 people had come to protest, although many were unable to enter the building or get past the lobby.
Their anger was majorly directed at Temu’s policies that fine merchants if they receive refund requests or complaints.
The international rise of Temu products had been the key driving force for PDD Holdings’ success after the Covid-19 pandemic, with Pinduoduo shares emanating from low gains of $31 in May 2022 to up to $159 in May 2024.
The company’s strong stakes are in contrast with those of competing local e-commerce apps, such as Alibaba and JD.com, which have tried to recover as China exited its zero-COVID posture with a struggling economy.
What They’re Saying
One merchant had told newspaper, The South China Morning Post that he lost almost all of his profits when he was fined about $410,000 for customer refunds and complaints.
Other merchants have meanwhile, laid complaints to the local media saying that the platform often refunds its customers even if they failed to send back the product — basically allowing them to keep it for free.
Meanwhile, Temu’s policy contains a guide for returning items and it states that refunds without return were a limited offer.
Temu had responded and told The China Securities Journal in a statement on Tuesday that it did not make money from fining its merchants.
“If fines are imposed, the proceeds will be given to consumers,” Temu had said.
Additionally, in a statement to Business Insider, Temu acknowledged the protests and said it was ” actively working” with the merchants to come up with a solution.
In the Chinese social media space, netizens expressed their anger at what they’ve described as “Western shoppers taking advantage of Chinese merchants”.
Why It Matters
The protest by Chinese suppliers has significant implications for Temu’s reputation as it may take the brunt of this controversy if it is perceived to be favouring Western shoppers over it Chinese merchants.
When this happens, competitors like Alibaba and JD.com may capitalize on this situation, and push out their merchant-friendly policies to attract disgruntled suppliers, hence it will have a negative impact for Temu if this crises is not properly handled.
In conclusion, the protest has drawn media attention, further escalating the issue. How efficiently and quickly Temu handles this incident will affect its standing in the industry.
