Temu and Shein cost Germany 2.4 billion euros yearly

Every day, Shein and Temu deliver 460,000 parcels to Germany. As both platforms violate several EU regulations, this results in unfair competition for retailers in the country. According to a recent study, this results in a yearly loss of 2.4 billion euros in added value to the German economy.

This is according to a study by IW Consult, commissioned by the German Retail Federation (HDE). Up to 4,000 German respondents aged between 16 and 69 were surveyed in February. Of the Shein and Temu users among those respondents, 51 percent said that they would have bought the same products at the same price if they had not been available on the Chinese platforms. And 19 percent would even have been willing to pay more.

Unfair competition

Because of that, the popularity of these Chinese platforms is costing German online sellers revenue. Temu and Shein have been criticized often for its unsafe goods, as well as failing to meet European legal and regulatory requirements. Local sellers do need to comply with these regulations, which places a heavy or very heavy burden on 90 percent of them. This results in unfair competition.

Jobs and tax revenue lost in Germany

HDE even said that more than 40,000 jobs in Germany have been lost due to Temu and Shein. In the retail sector alone, that comes down to 28,300 jobs. “If Temu and Shein did not exist, a large proportion of purchases would be made in German retail stores. This would require more employees”, explained Marco Trenz, an economist at the German Economic Institute.

‘If these purchases were made in German stores, income tax, trade tax and corporate tax would be paid’

This leads to more side effects. Federal, state, and local governments are also missing out on around 420 million euros in tax revenue per years as a result. “If the purchases were made not on Temu and Shein, but in German brick-and-mortar stores, income tax, trade tax, and corporate tax would also be paid”, Trenz emphasized.

‘Bleak future’

“The current data clearly illustrates the seriousness of the situation: The massive regulatory violations by Temu and Shein are causing extensive damage to the retail sector and the entire German economy. If policymakers do not finally take decisive and tangible action after years of inaction, I see a bleak future for Germany as a business location. If nothing else works, such massive violations must be stopped. Competition is good, but it must be fair”, said Alexander von Preen, president at HDE.

The federation wants customs to increase enforcement pressure. This could be similar to recent targeted inspections carried out in France on imported parcels. Up to 75 percent of imported products in that country did not meet EU standards.