TEMU, COMING SOON FROM A WAREHOUSE NEAR YOU

As I'm preparing next week's Temu Watch #10 report for Tech Buzz China, I'd like to share another sneak preview that is highly necessary amid all the talk about abolishing EU import tax exemptions and adding 2 euros to every product, as in the Netherlands, France, Belgium, and Luxembourg.

In itself, the abolition of the 150-euro tax exemption is a good decision, as it will level the playing field for other wholesalers and retailers who have to pay these taxes when importing in bulk. However, the idea that it will stop Temu is wishful thinking.

Temu has been preparing for this since mid-2024. There are three things they have done.

1) Temu has convinced part of the merchants to put their goods in overseas warehouses, mostly warehouses that are certified by Temu. This is called the semi-managed model; the merchant is responsible for logistics (following Temu's SOPs), while Temu handles pricing, sales, and marketing.

2) Temu started to recruit local merchants

3) Temu has adjusted its fully managed model, in which merchants only have to ship to a warehouse in China while Temu takes care of all logistics, marketing and sales. Now, Temu is shipping popular goods in bulk to self-operated overseas warehouses in advance.

In all of these cases, the goods are already in the EU or are imported in bulk. In the latter case, regular taxes and inspections already apply. Temu aims to ship only 20% of its orders in packages on aeroplanes by the end of the year. The original fully managed model was never going to be profitable and was a market-entry strategy to capture a large number of users and market share to build on.

How Temu is doing all of this will be explained in our Temu Watch #10 and #11 reports this month. In the meantime, here's a chart with Temu's self-operated warehouse space in Europe and North America. By October 2025, Temu operated 13 self-owned warehouses globally, including 10 in Europe, 2 in the United States, and one near the US-Mexico border. As mentioned, in addition to these, many merchants in the semi-managed model use warehouses.

Stay tuned.

-Ed

P.S. Just read this in a 36Kr article on Pinduoduo:

"Temu is now prioritising compliance and focusing on long-term, localised business in more countries. In August of this year, Temu asked some employees to move from its Shenzhen headquarters, which houses its cross-border business, back to Pinduoduo's headquarters in Shanghai, signalling the end of its phase of rapid overseas expansion."

"During the same period, Temu began sending nearly a thousand employees to overseas markets in the third quarter. Most of these employees will go to core markets in Europe and the United States to promote logistics optimisation, merchant expansion, compliance and other work. This is the largest overseas deployment since Temu was founded and will continue into the fourth quarter."