EU sets protectionist sights on Chinese e-commerce giants Shein, Temu

Shein and Temu send their packages by air, and that has sent freight costs skyrocketing. It’s also driven up fears of a squeeze on capacity when the year’s retail season peaks in December, The Wall Street Journal reported. Air freight is typically dominated by products like phones and computers, but the two Chinese retailers fill up cargo planes with small packages of clothing and household items. “The e-commerce boom out of China has transformed the airfreight market in an incredibly short period of time,” an analyst told the Journal. Shein and Temu aren’t the only ones to blame for rising cargo costs, however: Attacks by Houthi rebels targeting shipping in the Red Sea have also forced retailers to send more by air, raising prices.

The proposed action — which requires the sign off of every EU member state to pass — is the latest in a series of protectionist moves to curb imports of cheap Chinese goods that the EU sees as a threat to local manufacturers, particularly in the auto sector, Bloomberg noted. The efforts could be coordinated across the Atlantic: The US is also considering a similar measure when it comes to duty exemption for “low-value personal packages,” the outlet reported.

The West’s protectionist agenda could serve as an inspiration for China’s regional neighbors, an economist wrote in Nikkei: “In the end, it boils down to protecting domestic companies and jobs. While many Asian policymakers will face difficult decisions, the path is clear.” The laissez-faire approach adopted by many Asian countries has presented challenges, as China’s overcapacity in several key sectors squeezes local businesses. Manufacturers in Thailand, Indonesia, and South Korea have felt pressure as a result of Chinese goods, while entire industries, like metals and chemicals, have been affected, the economist added.