Over 1,000 Chinese merchants selling on the Temu platform gathered in Guangzhou on Friday for a five-hour event aimed at expanding their reach in global markets, notably excluding the United States. Amid escalating trade tensions between China and the US, Temu urged sellers to diversify and explore opportunities in the Middle East, Asia, and Latin America. The event, co-hosted by cross-border e-commerce consultancy Yuguo, included a fashion show and drew participants from manufacturing hubs like Dongguan and Shenzhen. The message was clear: continue producing in China, but shift focus to a broader international audience.
Temu, launched just three years ago, has quickly become a global contender, competing with giants like Amazon and fast-fashion newcomer Shein. Its rapid growth has been fueled by the direct-to-consumer model, shipping made-in-China products overseas with minimal overhead. This strategy benefited from the US “de minimis” exemption, which allowed goods under $800 to enter duty-free. However, that model came under threat when former President Donald Trump raised tariffs on Chinese imports to 145% and revoked the exemption earlier this month. In response, Temu has started transitioning US sales to local merchants.
Temu stated that it has been onboarding sellers in more than 20 countries, including the US, UK, Germany, Japan, and Australia, to expand local product offerings and improve delivery times. Despite this shift, the company continues finding ways to move Chinese goods to US customers. One such effort is the Y2 business model, introduced last month. It allows merchants to send single items to US warehouses, with Temu managing domestic logistics. This approach differs from the older “half-custody” model, which required bulk shipments and longer delivery times.
However, not all sellers are convinced. A Shenzhen-based merchant using half-custody noted that Y2 increases delivery times to around 14 days, affecting competitiveness. A Dongguan-based seller who previously relied on the “full-custody” model said he would not switch to Y2, calling it a temporary fix. With US-bound full-custody services suspended since April, many merchants are now looking toward Europe and the Middle East, with Europe offering a smoother transition due to fashion similarities.
There is cautious optimism that trade conditions could improve. Chinese Vice-Premier He Lifeng is expected to meet with US officials this weekend in Switzerland, and reports suggest the US may ease tariffs. Until then, Temu sellers are adapting and preparing for a more globally distributed customer base.
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