Suppliers sue e-commerce giant over unreturned products

Hundreds of traders staged a protest at the Guangzhou headquarters of the Chinese-made e-commerce giant, prompting the company to request police intervention. The discontent is rooted in trade policies that impose heavy penalties on products criticised by consumers and a no-return refund policy that passes the entire cost on to suppliers.

Beijing (/Agencies) – Hundreds of local vendors from Temu, the overseas shopping app run by Chinese multinational PDD Holdings, staged a protest outside the e-commerce giant’s headquarters in Guangzhou, denouncing the platform’s unreasonable policies. Dozens of protesters stormed PDD’s office on Monday afternoon, according to videos posted on social media and confirmed as authentic by merchants. Chinese outlet Yi Magazine reported on Tuesday that about 80 merchants entered PDD’s office, but left after police intervened.

This is not the first time that retailers have protested against Temu. “They were dissatisfied with the way Temu handled after-sales issues related to the quality and conformity of its products, disputing an amount of several million yuan,” reads a statement from the company, which does not refer directly to the protest on July 29. “The situation is stable and the company is actively working with retailers to find a solution,” the statement continued.

The actions of Chinese suppliers could increase uncertainty surrounding Temu, which is also facing tariffs imposed by the US and the European Union. Temu competes with Shein and TikTok Shop, as well as Alibaba Group’s AliExpress, in the direct sale of products made in China to foreign buyers.

With massive online advertising campaigns, Temu is expanding its sales to consumers in the United States and other overseas markets at bargain prices. But many Chinese suppliers complain of heavy “fines” imposed if customers complain or ask for refunds. Temu allows consumers to keep refunded items because of the high cost of returning goods, but some merchants have said they have not received any refunds in such cases.

A Guangzhou trader told the South China Morning Post that he had made 40 million yuan ($5.5 million) in sales on the platform last year, but was fined 3 million yuan by Temu due to returns and customer complaints, wiping out almost all of his profits.

A Shenzhen-based mobile phone seller said it had suffered losses of around $80,000 through Temu, in fines and non-payments for products sold. In addition, it had suffered losses equivalent to around 200 smartphone units due to the no-return policy. The merchant said Temu can fine merchants up to five times the retail value of the product.