What: The surge of Chinese e-commerce platforms in Europe is reshaping retail competition, as trade tensions and new regulations drive both market disruption and a fundamental transformation of local retail dynamics.

Why it is important: The influx of Chinese e-commerce is exposing gaps in European regulation and supply chains, compelling local retailers and policymakers to respond with new business models and oversight.

Chinese e-commerce platforms such as Temu and Shein are rapidly gaining ground in Europe, fundamentally altering the competitive landscape for both online and traditional retailers. This shift is being driven by escalating US-China trade tensions, which have prompted Chinese exporters to redirect goods toward Europe, resulting in record trade surpluses and a surge in low-cost imports. As these platforms exploit regulatory loopholes and leverage innovative business models—such as direct-to-consumer supply chains and aggressive digital marketing—they are able to offer ultra-low prices and rapid delivery, intensifying pressure on local players. European authorities are responding with new customs fees, stricter product compliance rules, and platform liability measures, but the effectiveness of these interventions remains uncertain. Meanwhile, the structural transformation of the retail sector is accelerating, with traditional companies under pressure to adapt to digital disruption, price-driven consumption, and evolving consumer expectations. The rise of Chinese platforms is not only a catalyst for regulatory reform but also a test of resilience and innovation for Europe’s retail industry.

IADS Notes:

The rapid expansion of Chinese platforms like Temu and Shein in Europe is fundamentally reshaping the region’s retail landscape, as documented by the Financial Times (June 2025) and Retail Week (October 2024), with both platforms pivoting their focus and advertising spend to Europe in response to mounting US regulatory pressure and tariffs. The Diplomat (March and April 2025) highlights how Temu’s Consumer-to-Manufacturer model and customs loopholes have enabled unprecedented market penetration, but also notes the growing regulatory challenges these platforms now face. BCG (April 2025) and Forbes (April 2025) report that US tariffs are forcing Chinese companies to restructure supply chains and redirect exports, with Europe absorbing much of this redirected flow. This shift is occurring as European retail undergoes deep structural transformation, with BCG (July 2025) and BoF (June 2025) identifying digital adaptation and international competition as key drivers of sector-wide distress and the need for urgent transformation. In response, the EU and national authorities are introducing significant regulatory measures, including abolishing duty exemptions, imposing new parcel fees, and making platforms liable for product compliance, as detailed by the Financial Times (February 2025), Journal du Net (April 2025), and Inside Retail (May 2025). These developments collectively underscore the urgency for European retailers to innovate, adapt, and compete in a market increasingly defined by platform-based business models and global supply chain shifts.

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