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Temu, Shein and Aliexpress have hundreds of millions in sales in Switzerland. Local online retailers are suffering from this. They demand measures.
Mobile phone cases, sunglasses or hairdryers: the Chinese online shop Temu offers this and much more – at rock-bottom prices. Shipping from the Far East is also free. This is a thorn in the side of Swiss retail and online retail.
“Swiss online retailers are coming under pressure,” says Dagmar Jenni, director of the Swiss Retail Federation. Your sales fell by three percent in the first quarter of 2024 compared to the previous year. This is shown by an evaluation of debit and credit card transactions. “That worries us.”
Lower standards for product safety
The association complains that Chinese providers do not have to meet the same rules as Swiss retailers because they are not subject to local laws. This means they don’t have to guarantee the same standards of product safety. In addition, the value of shipments from China would be declared lower than actually in order to avoid VAT. “We think that’s unfair,” says Jenni.
Without expensive product certification and with inferior materials, online shops in China can save costs. Another reason for their inexpensive range is the business model, says retail expert David Morant from the consulting firm Carpathia: “These are marketplaces where the manufacturers are directly connected to the customers. All the intermediary trade with importers or wholesalers is eliminated.”
Platforms lure customers
In addition to low prices, the platforms also attract customers with “gamification,” i.e. by incorporating playful elements, as Morant explains. This way, customers could earn discounts in the Temu app.
Legend: An example of “gamification” at Temu is the Wheel of Fortune. Anyone who visits the website for the first time will win a voucher worth 100 francs. But you actually don’t need any luck to get the bonus. Each person receives the voucher. This entices newbies to shop. Screenshots website Temu
But Temu also does intensive marketing outside of its website. On Google, the marketplace has bought visibility for its products for many search terms. Major bank JPMorgan Chase estimates that Temu will spend $3 billion on advertising this year alone.
Temu has only been active in Europe since spring 2023. The consulting firm Carpathia estimates that the Chinese retailer turned over 350 million francs in Switzerland last year. This means that Temu has quickly caught up with the long-standing marketplace Aliexpress.
The importance of Chinese online shops will continue to increase, says Markus Herrmann from the China Macro Group. His company analyzes Chinese politics and economics. “A new phase is beginning for e-commerce companies in China. The domestic market is highly competitive,” he says. For example, the growth rates and profit margins of marketplaces in China would decrease.
For these reasons, companies are turning their attention abroad, says Herrmann. They would also use large data analyzes to try to better understand Swiss customers, for example.
Dagmar Jenni from the Swiss Retail Federation demands an equal level of play for Swiss and Chinese retailers. “It is not acceptable that Swiss retailers have to ensure that the products are safe and not harmful to health, but the low-cost suppliers do not.”
Politicians are now also concerned with Chinese online shops. There are two initiatives open to this in the National Council. Jenni hopes that action will soon follow.