The scary reality of the rise-and-rise of China’s online shopping platform Temu & its popularity in Australia

Clothing, homewares, outdoor furniture, power tools, electronics.

If you can dream it – Temu likely sell it.

It has been one year since the online Chinese retailer launched in Australia and New Zealand, bringing discount items to consumers direct from the factories they are made in.

Since arriving, the cross-border e-commerce outfit has taken a large bite out of Australia’s lucrative retail sector.

So successful is the Australian arm of the business, market researcher Roy Morgan predicts Temu is on track to make $1.3 billion in annual sales.

And after sifting through the data, the Australian Financial Review last month reported Temu is now the eighth-largest online retail brand in Australia, attracting 7.9 million average monthly site visits between October and December last year.

Those numbers exceeded the 7.4 million site visits of Australian-based online retailer Catch, but were dwarfed by that of Amazon Australia which has significantly invested in the local market in recent years and had 75.2 million average monthly visits during the same time.

Since launching in the United States in 2022, Temu has rapidly expanded throughout the globe.

Temu Canada was launched one month before Australia, and following the launch here the retailer expanded to France, Germany, Italy, the Netherlands, Spain and the United Kingdom.

But for many, questions still hang over what exactly the platform is, its Chinese parent, and how it can run a profitable business offering up items at such discount prices.

What are we really giving up?

Love it or hate it, online discussions about Temu quickly descend into questions about the legitimacy of the platform.

So popular is the question, ‘is it safe to shop on Temu’ appears as a Frequently Asked Question on the company’s own website.

Many simply label it a scam.

Others raise concerns about the lengthy terms and conditions associated with the outlet’s popular app, as well as the data the company is taking from users who agree to them.

For its part, Temu’s website states it is a “safe shopping website” that “cares about customers’ privacy and data security”.

Cyber security expert professor Paul Haskell-Dowland said Australians needed to realise that every bit of their data was valuable, and “everywhere we put it” is one more opportunity to become a target.

The professor of cyber security practice at Edith Cowan University said one concerning factor about Temu was the China connection, which meant the company needed to answer to their government.

“We know that organisations with connections in China — particularly when they are Chinese companies — do have to answer to the Chinese Communist Party,” he said.

“It basically gives the government effectively free rein to access any data that they choose.

“China has a different approach to privacy.

“That’s where we need to just be that little bit more cautious.”

For shadow minister for home affairs and cyber security, Senator James Paterson, Temu is just another example of concerning data-collection practices seen commonly among Chinese-made platforms.

“We know that data stored in China is subject to the Chinese government’s national intelligence laws and can be accessed by the Chinese Government, which is why it is crucial that Temu is transparent with its users about the data it is collecting and where it is stored,” he said.

“The Australian Government should also look closely at this application to see if it poses national security risks, and if so, they should consider banning it from Government devices as they did with TikTok last year.”

Professor Haskell-Dowland said all organisations, big and small, were constantly collecting data.

“They do it to varying levels and with varying purposes,” he said.

“When you look to someone like Facebook, it’s quite obvious that they are not making money out of the hundreds of millions of users, they’re making money out of services they can wrap around it and in particular, it’s the value of data they collect that is highly attractive to advertisers.”

A spokesman for the Federal Department of Home Affairs said concerns about the security of Australian data on apps were well-known, and not limited to one platform.

He said the Australian Government had brought forward measures to mitigate identified security risks through the 2023-2030 Australian Cyber Security Strategy including developing a framework to address vendor-based national security risks, a review into the data-broker ecosystem and the co-design of a voluntary cyber security code of practice for app stores and app developers.

Working Conditions

Lawmakers in the United States last year warned Americans there was an “extremely high risk” that products sold on the platform were made in China with forced labour.

Those claims came as part of an ongoing investigation into compliance with a 2021 law that barred the import of goods into the US that were made using forced Uyghur labour.

When questioned about reports of alleged poor working conditions, Temu said allegations about poor conditions were “completely ungrounded”, adding it strictly prohibited the use of forced, penal, or child labour in its supply chains.

“Employment by all our merchants and suppliers must be voluntary,” the Temu statement read.

“Temu’s merchants, suppliers, and other third parties must pay their employees and contractors on time and comply with all applicable local wage and hours laws.

“Our current standards and practices are no different from those of major US e-commerce platforms, such as Amazon, eBay, and Etsy.”

However, Australian Senator David Shoebridge said modern slavery was a multi-billion dollar industry, and he said the company appears to be “ruthlessly focused” on costs regardless of ethical considerations.

Mr Shoebridge has been campaigning for years to have modern slavery practices addressed in Australia.

He told The Nightly there should be checks, balances and regulations in place to ensure what Temu is saying is correct, to prevent Australians from being an unwitting contributor to modern-slavery practices.

And he believes a modern slavery commissioner could provide those checks and balances.

“There’s no question that a well-resourced modern slavery commissioner could require any company that undertakes business in Australia to lodge comprehensive modern slavery statements which would have to evidence how they were ensuring the removal of any slavery from the supply chain,” Mr Shoebridge said.

“My strong suspicion is if Temu was required to do that, it would expose the problems in their supply chain and could potentially lead to them being driven out of business in the country.

“People should be aware of this if they think they’re getting a bargain on Temu, it may well be a bargain that someone else is paying for.”

Stolen Designs

Among the issues that have been raised about Temu in recent years are the concerns from creators who say their intellectual property has shown up on products sold by Temu.

Melbourne-based illustrator Kelsie Trainor runs a popular Instagram page and website Kelsie Cosmic, selling items adorned with designs she has created.

Last year one of those designs turned up on a festival-goer, but to her surprise, the clothing he was wearing was not made or sold by her.

Ms Trainor told the ABC she investigated at the time and realised the design was on Temu.

She posted on social media about the situation, it went viral and the design eventually disappeared from the Temu site.

In another story, Australian artist Tank was also successful in getting copycat designs removed from Temu’s website.

Bargains as cost of living bites

“Shop like a billionaire” is Temu’s slogan, and in February that slogan was front and centre as more than 123 million people watched the Kansas City Chiefs beat the San Fransisco 49ers at this year’s Super Bowl.

Taking out a number of coveted — and expensive — advertising slots before, during and after the game, Temu encouraged the mammoth global viewership to get online and bag themselves a bargain.

Among the bargains found on Temu’s Australian website on any given day, are items like the 184-piece first aid kit listed for $11.87, or a handheld vacuum which has been sold to over 100,000 shoppers for $12.31.

The Chinese outlet even offers a 120x160cm rug adorned with an Aboriginal flag design for $27.19.

Products that Temu says are “quality” and are sold at “fair prices”.

In years gone by, Temu — which is a subsidiary of Nasdaq-listed PDD Holdings — has been notoriously quiet in response to media reports.

However, a lengthy and wide-ranging statement supplied to The Nightly by Temu in response to a raft of questions about the business said it was the “quality and fair prices” that kept Australian shoppers coming back.

“A year into our Australian launch, the response has been encouraging,” the statement read.

“We’ve seen a significant increase in customer growth, driven in part by referrals and word-of-mouth, which speaks volumes about the trust and satisfaction our users have in our platform.”

Among the more than 2000 reviews for Temu’s first-aid kit, many seem to agree.

Reviewers, some of whom share their own images of their purchases for the benefit of other Temu shoppers and to earn valuable ‘points’ for their own account which translates into money for future purchases, labelled the item “exactly as described”.

While the reviewers cannot be individually verified, thousands upon thousands of reviews are uploaded to the site.

Not all reviews are good, with some shoppers complaining of packages not arriving at all, or low-quality items being received.

And in a cost-of-living crisis, it is no wonder part of the allure for seasoned Temu shoppers is the “price adjustment policy”, which offers shoppers money back in their account if items reduce in price in the 30 days from purchase.

Changing the game

Hard to miss, Temu purchases are mailed out globally in its distinctive, bright orange packaging — the same colour that adorns the company’s logo.

While shoppers can receive free delivery when spending a certain amount with Australian online retail operators, Temu offers free international delivery on all orders.

Due to the sheer volume of items being purchased around the globe and being shipped from China global shipping experts are reportedly seeing a shift in the air-cargo transit industry.

Speaking to Reuters last month, Bollore Logistics Greater China operations director Basile Ricard said the biggest trend impacting air freight was not the issues in the Red Sea, it was Chinese e-commerce companies like Temu or Shein.

Having recently returned from living in Hong Kong, Seko Logistics managing director Paul Good said the speed of Temu’s growth was at the heart of that change.

Mr Good said while Seko Logistics had not done any business with Temu, he’d been watching with interest.

“Over the last 12-18 months, they’ve sort of gone from company to company (and) overwhelmed them with volume.

“The volume is such that most companies can’t cope with it, plus the margins are very low (and) the payment terms are quite stretched.

“So now I think what they’re doing is they’re actually going into chartering aircraft themselves, or cutting what they call ‘block-space agreements’ with the airlines.

“So, definitely that’s creating ripples throughout the air cargo market, particularly out of Hong Kong.”

Temu’s statement said the business was able to cut down on costs by removing the middleman from the supply chain.

“Our mission is to democratize access to high-quality products at affordable prices,” it read.

The next Amazon?

Since 2011, Amazon claims it has invested more than $15 billion across all of its businesses in Australia, with the company housing storage space across six fulfilment centres locally.

A spokeswoman for the company said it was “continually innovating” to offer an outstanding shopping experience for Australians.

“We carry a broad retail selection with hundreds of millions of items across well-known, emerging, and value brands, as well as from the thousands of Australian small businesses that sell in our store,” she said.

While Temu would not disclose whether it was considering opening any warehousing facilities in Australia to keep up with demand, as Amazon had done, the company said it was continually evaluating its strategies and exploring opportunities to “better serve” Australians.

Mr Good said word on the street in Hong Kong was that Temu was working very hard to achieve scale.

“They’re burning money, but I mean you could use the Amazon example where they burnt money for years to build scale, and then they get out there.”