According to Silicon Republic, European Commission officials raided Temu’s European headquarters in Dublin in an unannounced inspection last week. The probe is under the Foreign Subsidies Regulation (FSR), a 2023 law designed to tackle financial advantages from non-EU governments. Breaches can result in massive fines of up to 10% of a company’s annual turnover. This comes as the EU plans to impose new customs fees on small packages from places like China by 2026, scrapping a €150 waiver. Valdis Dombrovskis, the EU commissioner, noted that 91% of such direct-to-consumer imports come from China. Separately, Temu was already found this year to be in breach of the Digital Services Act for failing to control illegal products on its platform, while its parent company PDD Holdings, based in Dublin since 2015, reported nearly $54 billion in revenue for 2024.
Temu Under the Microscope
So here’s the thing: this raid isn’t some random, isolated event. It’s part of a much broader and increasingly aggressive EU regulatory offensive against Chinese e-commerce platforms. Think about it. They hit Temu earlier this year for the Digital Services Act, they’re changing the entire customs regime specifically because of the flood of cheap parcels from China, and now they’re kicking the doors in looking for evidence of foreign subsidies. The message is pretty clear: the era of unchecked, ultra-cheap online retail from third countries is over. The EU is systematically building a legal wall, brick by brick.
The Broader Market Shakeup
Who wins and who loses here? Well, if you’re a traditional retailer or an Amazon seller based in Europe who has to comply with all sorts of local taxes and regulations, you’re probably quietly cheering. They’ve been competing on what they see as a wildly uneven playing field. Temu and Shein’s model of direct shipping has been a massive disruptor. But if these regulatory actions successfully increase their costs and compliance burden, that price advantage starts to erode. Basically, the goal is to force them to play by the same rules. The risk, of course, is that consumers get hooked on those low prices and won’t be happy paying more, even if it’s for a “fairer” market.
A New Era of Enforcement
Look, the Foreign Subsidies Regulation is a powerful new tool, and they’re clearly not afraid to use it. Raiding a headquarters is a serious escalation. It shows they’re after hard internal evidence—financial records, communications with the parent company, anything that shows PDD Holdings or Chinese state-backed financing gave Temu an unfair leg up in the EU market. This isn’t just about cheap toys and electronics anymore; it’s about the fundamental integrity of the single market. And with potential fines that could reach billions given Temu’s revenue, the stakes are astronomically high. This move will send a chill through every major foreign company, especially Chinese tech firms, operating in Europe. They’re all on notice now.
