Chinese eCommerce players such as Shein and PDD’s (NASDAQ:PDD) Temu have clocked rapid market share gains across major international markets thanks to their dirt-cheap product offerings. The companies are now in the crosshairs of regulators in Europe.
Europe Takes a Stance Against Cheap Chinese Imports
The E.U. is proposing to impose import duties on cheap goods bought from eCommerce platforms outside the region. This move would mainly impact Shein, Temu, and Alibaba’s (NYSE:BABA) (HK:9988) AliExpress.
According to Bloomberg, the E.U. currently has a $161 duty-free limit for online purchases. While the threshold is meant for small or personal gifts, it has led to a flood of small-ticket imports from these platforms. The proposal will apply to all non-E.U. eCommerce platforms.
The measure, which needs political consensus to pass, signals rising regulatory actions against cheap Chinese imports. Recently, various Chinese imports, from EVs to solar products, have come under regulatory scrutiny in the U.S. and Europe. The E.U. plans to introduce provisional tariffs of up to 38% on Chinese EVs this month. In the U.S., Temu has gained rapid market share, outperforming discount retailers such as Five Below (NASDAQ:FIVE) and Dollar General (NYSE:DG). In Europe, Shein has captured market share from names such as Hennes & Mauritz and Zara.
Is PDD a Buy, Sell, or Hold?
Importantly, rising protectionist actions in key international markets could impact PDD. Shares of the company have rallied by nearly 88% over the past year. Overall, the Street has a Strong Buy consensus rating on the stock, alongside an average PDD price target of $218.36. This points to a further 63% potential upside in the stock.
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