Thousands of small business owners stormed the Guangzhou offices of Temu, an online retail giant, earlier this month. They protested the platform's financial penalties and return policies, arguing that these measures are crippling small businesses.
On Monday, approximately eighty business owners assembled on the thirtieth floor of Temu's Guangzhou headquarters. According to Chinese news outlet Yicai, some individuals were able to access the company's offices.
Temu is a subsidiary of PDD Holdings, which also oversees the domestic online marketplace Pinduoduo. Most of these demonstrators operate small enterprises on Temu, an online marketplace specializing in Chinese goods.
The platform has garnered huge popularity in Western markets due to its competitive pricing. Recent data indicates that a substantial twenty percent, or one in five, Americans visit the Temu website weekly.
Angry Suppliers Storm Temu's Office
Yicai reported that office operations were halted after the protesters entered the building. However, the demonstrators dispersed upon the arrival of law enforcement. The news outlet also indicated that the merchants had attempted to confront the company's top management but could not secure a meeting.
Several local news sources reported that approximately three hundred individuals convened for the protest, although many were prevented from entering the building or progressing beyond the reception area.
Videos shared on social media platforms, including Weibo, depicted large groups assembled outside the building while chanting slogans. One video clip captured protesters seated on the floor of the PDD Holdings office while security personnel obstructed a nearby passageway.
Yicai reported that approximately one hundred individuals staged a similar protest on July 22, featuring banners and demonstrations outside the headquarters building. The primary focus of the outrage was Temu's policies imposing financial penalties on merchants for processing refund requests or addressing customer complaints.
Temu Fees Cripple Small Businesses
One merchant told The South China Morning Post that he lost almost all of his profits when he was fined about $410,000 for customer refunds and complaints. Others have complained to local media that the platform often refunds its customers even if they don't send back the product, essentially allowing them to keep it for free.
Temu's policy outlines a procedure for returning items and specifies that refunds issued without merchandise return are subject to limitations. The China Securities Journal, a Beijing-based publication under the state-run Xinhua news agency, reported that merchants had visited the Guangzhou office approximately ten times during July to voice their grievances.
The China Securities Journal reported a claim from an anonymous Temu employee asserting that many protest participants were not merchants but rather employees or individuals helping to bolster the protest. In a statement issued on Tuesday, the platform refuted the claim that it profited from merchant fines.
"If fines are imposed, the proceeds will be given to consumers," Temu said. In a statement to Business Insider, Temu acknowledged the recent protests and indicated that it is working diligently to find a resolution in collaboration with the affected merchants.
"Recently, a group of merchants gathered at the office of a Temu logistics affiliate in Guangzhou," the statement said, noting that the group "included about a dozen sellers."
"They were unhappy with how Temu handled after-sales issues related to the quality and compliance of their products, disputing an amount worth several million yuan," the statement continued. "These merchants have declined to resolve the disputes through the normal arbitration and legal channels stated in the seller agreements."
Financial Strain: Suppliers Fight Back
Chinese social media platforms are witnessing a surge in resentment towards Western consumers who are perceived as exploiting domestic merchants. A Hebei-based blogger wrote: "Foreigners can buy products from Chinese merchants, receive the goods, and not spend any money,"
"It has essentially moved the zero-dollar purchase practice from the US to here, making Chinese companies provide goods to foreigners for free." Another blogger exclaimed that despite China's socialist system and stringent corporate oversight, numerous companies engage in more capitalistic practices than their counterparts in capitalist nations.
Temu's global expansion has been instrumental in PDD Holdings' post-pandemic success, propelling Pinduoduo shares from a low of $31 in May 2022 to a peak of $159 by May of this year.
PDD Holdings' solid financial results starkly contrast with its local e-commerce rivals, Alibaba and JD.com, which have grappled with sluggish consumer spending as China transitioned out of its zero-COVID policy.
Temu, a big online store, is struggling with the sellers selling stuff on its site. The sellers are really mad because Temu is charging them a lot of money when customers send stuff back, which has caused a big fight. People are even wondering if Temu is a safe place to buy things or if it's a scam.
