Competition Authorities Storm Temu’s Istanbul Operations
Turkish competition authorities conducted an early morning raid on Temu’s office in Istanbul this Wednesday, marking another significant regulatory challenge for the Chinese e-commerce platform. A spokesperson for Temu confirmed the operation to Reuters, stating that company officials will cooperate fully with Turkish authorities while noting that laptops and computers were seized during the visit. This latest enforcement action follows a similar December raid on Temu’s European headquarters in Dublin, where EU investigators examined potential unfair Chinese state subsidies.
The Turkish Competition Authority (Rekabet Kurumu) characterized the operation as an “on-site inspection” rather than a formal investigation, though such examinations often precede formal proceedings. In a notable discrepancy, the authority denied Temu’s statement about devices being seized, stating that this claim “does not reflect the truth.” The antitrust body declined to provide additional details, citing the need to ensure the examination proceeds properly without interference.
This development represents the latest chapter in Temu’s increasingly turbulent global expansion. The platform, owned by Chinese e-commerce giant PDD Holdings, has experienced explosive growth by offering products from clothing to smartphones at dramatically reduced prices. Its tagline “Shop like a billionaire” captures the company’s value proposition to consumers, though this approach has drawn intense scrutiny from regulators and traditional retailers worldwide.
Global Pattern of Regulatory Scrutiny
The Turkish raid is not an isolated incident but rather part of a broader international pushback against Temu and similar Chinese e-commerce platforms. Just last month, European Union regulators executed a dawn raid on Temu’s Dublin headquarters under the bloc’s Foreign Subsidies Regulation (FSR). This legislation targets companies that may benefit from unfair foreign government support, with potential fines reaching up to 10% of a company’s annual turnover for violations.
The European Commission’s investigation centers on whether Temu receives unfair advantages through Chinese state subsidies, which could include zero-interest loans, preferential tax treatment, or other forms of below-cost financing. The platform launched in the EU in April 2023 and has already accumulated approximately 116 million average monthly users, according to its latest transparency report. This rapid market penetration has prompted Amazon to launch its own competing service called “Amazon Haul” to counter Temu’s success.
“We can confirm that the Commission has carried out an unannounced inspection at the premises of a company active in the e-commerce sector in the EU, under the Foreign Subsidies Regulation,” a Commission spokesperson stated regarding the Dublin operation.
The regulatory pressure extends beyond Europe. Earlier this month, Turkey scrapped its 30-euro duty-free allowance on imported goods, specifically citing concerns about protecting domestic production and ensuring health and safety standards for e-commerce imports. This change, scheduled to take effect in early February, directly impacts platforms like Temu that rely on duty exemptions to maintain ultra-low pricing. The EU has similarly agreed to eliminate its duty-free allowance on parcels under 150 euros ($176), responding to complaints from European retailers about unfair competition.
Temu’s Controversial Business Model
At the heart of the regulatory concerns lies Temu’s fundamentally disruptive business model. Unlike traditional retailers that maintain inventory in local warehouses, Temu connects Chinese manufacturers directly with global consumers, shipping products individually from China. This direct-to-consumer approach allows the platform to offer prices far below those of established competitors, but it relies heavily on customs exemptions for low-value parcels.
The platform’s growth strategy has proven remarkably effective. Since its international expansion, Temu has attracted tens of millions of shoppers worldwide through aggressive marketing campaigns and unbeatable prices. However, this success has generated substantial criticism from traditional retailers who argue that platforms like Temu and its rival Shein enjoy unfair advantages through customs loopholes and potentially subsidized pricing.
Temu faces additional scrutiny under the EU’s Digital Services Act, which governs how online platforms operate. In July, European regulators announced preliminary findings that Temu was not doing enough to prevent the sale of illegal products through its marketplace. This investigation focuses on product safety, intellectual property protection, and consumer rights issues that arise when platforms facilitate sales from thousands of third-party sellers without adequate oversight.
The Customs Loophole Under Pressure
A central element of Temu’s business model involves the “de minimis” customs exemption, which allows goods below a certain value to enter countries duty-free. For decades, this exemption applied to low-value gifts but became a critical component of cross-border e-commerce as platforms learned to optimize shipments to stay below the threshold.
In the United States, the threshold stood at $800, allowing massive volumes of Chinese goods to enter without duties. However, this exemption faces elimination as part of broader trade tensions. The potential removal of this loophole presents a significant threat to Temu’s pricing advantage, potentially requiring the platform to raise prices or absorb substantial tariff costs.
Both Turkey and the EU have moved decisively to close these customs loopholes. Turkish authorities specifically cited health and safety concerns when announcing the elimination of their duty-free allowance, suggesting that low-priced imports often bypass quality control measures that domestic producers must follow. This regulatory shift reflects growing recognition that bargain prices may come with hidden costs in consumer protection and market fairness.
PDD Holdings Faces Multiple Challenges
The Turkish raid coincides with separate regulatory challenges for PDD Holdings, Temu’s parent company. Chinese tax authorities recently fined a PDD subsidiary approximately $14,000 for failing to submit required information about platform operators and employees for the third quarter of 2025. While this penalty represents a relatively minor financial hit, it adds to the pattern of regulatory friction facing the company.
Remarkably, PDD Holdings shares rose nearly 6% in pre-market trading despite the dual developments of the Turkish raid and the Chinese tax fine. Market analysts suggest investors had anticipated more severe penalties, creating relief when the actual fine proved relatively modest. This market reaction demonstrates investor confidence in Temu’s fundamental business model, even as regulatory headwinds intensify.
Behind the scenes, PDD has faced internal turmoil regarding its government relations. Reports indicate that the company fired a government relations team in Shanghai following an altercation between employees and Chinese regulators during an investigation into fraudulent deliveries on PDD’s domestic e-commerce platform. This incident highlights the complex relationship between fast-growing Chinese tech companies and government authorities seeking to maintain regulatory control.
Economic Context and Trade Dynamics
The regulatory actions against Temu occur within a broader context of shifting global trade dynamics. China’s trade surplus exceeded $1 trillion for the first time in November, as Chinese manufacturers redirect goods to markets outside the United States in response to tariffs. This export surge has flooded European, Australian, and Southeast Asian markets with inexpensive Chinese goods, intensifying local competition concerns.
Temu’s rapid expansion represents one manifestation of this export push. The platform serves as a direct channel for Chinese manufacturers to reach global consumers, bypassing traditional retail distribution networks. While this benefits consumers through lower prices, it creates substantial challenges for local businesses that must comply with higher regulatory standards and labor costs.
The coordinated regulatory response from multiple jurisdictions suggests an emerging consensus about addressing unfair competition in cross-border e-commerce. Both the EU and Turkey have moved to eliminate customs advantages, while competition authorities investigate potential market distortions. These actions signal that the era of unfettered cross-border e-commerce growth may be ending as governments seek to balance consumer benefits with domestic economic interests.
Temu’s Response and Future Outlook
In statements to Reuters, Temu emphasized its commitment to cooperation with authorities. A company spokesperson stated, “We will cooperate fully with the Turkish authorities,” while maintaining that the incident occurred unexpectedly without prior notice. The company expressed confidence in its compliance operations in Turkey despite the raid.
Temu also confirmed to Global Times that it registered a local entity and established its Istanbul office last year, suggesting an attempt to establish stronger local presence. This localization strategy may represent an effort to address regulatory concerns by demonstrating commitment to the Turkish market and compliance with local business requirements.
The company faces a challenging path forward. Maintaining its ultra-low price proposition while navigating increasingly restrictive regulatory environments presents significant operational difficulties. The elimination of duty-free exemptions will fundamentally change the economics of cross-border e-commerce, potentially requiring Temu to rethink its business model or accept reduced margins.
Despite these challenges, Temu’s consumer value proposition remains compelling. Millions of shoppers worldwide have embraced the platform’s bargain prices and extensive product selection. The key question facing the company is whether it can adapt to regulatory pressures without losing the competitive advantages that fueled its explosive growth.
Broader Implications for E-commerce
The regulatory actions against Temu carry significant implications for the broader e-commerce landscape. As governments worldwide scrutinize cross-border online retail, other platforms may face similar investigations. The coordination between EU and Turkish authorities suggests potential for harmonized regulatory approaches across jurisdictions.
Traditional retailers, who have long complained about unfair competition from platforms benefiting from customs loopholes, may find relief in these regulatory shifts. The elimination of duty-free exemptions levels the playing field somewhat, allowing domestic businesses to compete more effectively against Chinese platforms that previously enjoyed structural advantages.
However, consumers accustomed to ultra-low prices may face higher costs as regulatory changes take effect. The challenge for policymakers will be balancing consumer benefits against legitimate concerns about market fairness, product safety, and domestic economic health. The ongoing investigations into Temu will likely set important precedents for how governments address these complex trade issues in the digital age.
As Temu navigates this turbulent period, the company’s ability to adapt to regulatory requirements while maintaining its value proposition will determine its future trajectory. The platform’s experience offers a case study in the challenges facing rapidly expanding global companies that operate at the intersection of technology, commerce, and international trade regulation.
The Bottom Line
- Turkish competition authorities raided Temu’s Istanbul office in an early morning operation, conducting what they termed an “on-site inspection”
- Temu confirmed the raid and stated laptops and computers were taken, though Turkish authorities denied equipment was seized
- This follows a December 2025 raid on Temu’s Dublin headquarters by EU regulators investigating potential unfair Chinese state subsidies
- Temu is owned by Chinese e-commerce giant PDD Holdings and operates a direct-from-China shipping model that relies on customs duty exemptions
- Turkey recently eliminated its 30-euro duty-free allowance on imports to protect domestic production, with changes taking effect in early February
- The EU has similarly agreed to end duty-free allowances on parcels under 150 euros ($176) following complaints from European retailers
- PDD Holdings shares rose nearly 6% despite the raid and a separate tax fine in China, as investors found the penalties less severe than expected
- Temu faces additional scrutiny under the EU’s Digital Services Act over allegations of insufficient prevention of illegal product sales
- The regulatory actions reflect growing international concern about Chinese e-commerce platforms’ impact on local markets and fair competition
