In recent developments, the U.S. Consumer Products Safety Commission (CPSC) has called for an investigation into e-commerce retailers Shein and PDD Holdings Inc. PDD owned Temu. The demand comes in light of allegations regarding the sale of “deadly baby and toddler products” on these platforms, as per a CPSC statement.
What Happened: CPSC Commissioners Peter Feldman and Douglas Dziak are advocating for a probe into the compliance of Shein from Singapore, Temu from China, and other similar foreign-owned e-commerce platforms with CPSC regulations, Reuters reported on Wednesday. The investigation would also scrutinize the management of their third-party sellers and the presentation of imported goods.
Shein and Temu, both of which import budget-friendly goods from China to the U.S., have been flagged by the Commission due to their use of de minimis, a rule which permits packages valued at $800 or less to evade tariffs if shipped directly to consumers.
The success of Shein and Temu in the U.S. market can be attributed to their low prices and the use of de minimis. However, the quality of their products has been a subject of criticism. In 2023, a bipartisan group of U.S. lawmakers proposed a bill to repeal the de minimis rule, which is extensively used by e-commerce platforms, including third-party sellers on Amazon.com Inc. AMZN and Walmart Inc. WMT.
Why It Matters: The e-commerce landscape has been witnessing a fierce competition, with Amazon.com maintaining its dominance, while emerging players like Temu, Shein, and TikTok Shop are gaining ground.
However, these Chinese retailers have been facing regulatory challenges. Earlier in July, the European Union (EU) considered imposing customs on inexpensive goods bought online through Chinese retailers like Shein and Temu. Additionally, Shein filed a lawsuit against Temu in August for alleged design theft, counterfeiting, intellectual property infringement, and fraud.
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This story was generated using Benzinga Neuro and edited by Pooja Rajkumari
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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