Chinese e-commerce platforms like Temu and SHEIN have seen large gains in Japan by offering low prices and decent quality. Temu, which focuses on daily essentials, has acquired over 15 million monthly active users in Japan within 6 months of its launch. This figure already exceeds 50% of the average user base of Japan’s top 3 e-commerce sites – Amazon Japan, Rakuten Ichiba, and Yahoo Shopping. Meanwhile, SHEIN has surpassed leading Japanese fashion marketplace ZOZOTOWN with 8.39 million users in January 2024, more than triple the number from a year earlier.
The secret behind behind the business models of Temu and SHEIN is the direct supply chain they have with small and medium manufacturers in China. This allows them to offer competitive pricing without compromising much on quality. Aggressive marketing tactics like heavy discounts and coupons have also helped them to rapidly gain market share.
As growth in the overseas footprint of Chinese ecommerce firms (now including TikTok) continues, they face barriers ranging from national security concerns to consumer rights and competition / IP infringement issues.
Some have voiced concern that the rise of Temu and SHEIN in Japan could threaten existing Japanese players. Moreover, these firms may face issues with the Japanese government over human rights concerns and intellectual property violations affecting the companies’ supply chains. SHEIN is also facing a lawsuit from leading Japanese fashion brand Uniqlo.
In the US, Temu and SHEIN are already in the crosshairs of the US-China Economic and Security Review Commission for links to forced labor in Xinjiang as well as IP theft.
Source: Nikkei Chinese, February 21, 2024
https://zh.cn.nikkei.com/china/ccompany/54870-2024-02-21-05-00-53.html