The situation: Challenges for Chinese sellers continue to mount.

• The latest example is the EU’s move to fast-track the closure of its de minimis loophole—which allows duty-free imports on parcels valued under 150 euros ($174)—to as early as Q1 next year, two years ahead of schedule.
• European finance ministers have agreed to the plan, though it still requires approval from the European Parliament before it can take effect.
• The rapid pivot reflects a stark reality: Low-value parcel imports into the EU are surging at a near-exponential pace; roughly 4.6 billion items arrived last year, up from 2.3 billion in 2023 and 1.4 billion in 2022, per a recent European Commission report.

The context: Europe’s tightening regulatory landscape is bad news for companies like Shein and Temu, which had been shifting more aggressively into Europe after the US closed its own de minimis loophole earlier this year.

• Shein pursued an offline strategy, opening its first permanent concession inside the BHV department store in Paris earlier this month through a partnership with Société des Grands Magasins (SGM). But the plan is already falling flat. Protesters accusing the company of unethical practices dominated opening-day headlines, and customers have been surprised by higher-than-expected prices. The weak reception prompted SGM to pause the rollout of five additional Shein concession stores across France.
• Meanwhile, France’s finance ministry pushed to suspend Shein’s online platform for non-compliance with French law after authorities found “illegal firearms and child-like sex dolls” listed for sale on the site. It later halted the suspension effort but said Shein will remain under tight supervision.
• More recently, Chinese tax authorities ordered major ecommerce platforms—including Temu and Shein—to hand over Chinese sellers’ Q3 sales data as part of a broader push to crack down on cross-border tax evasion.

Our take: Chinese sellers’ growth playbook is starting to hit its limits as regulators in the US and Europe tighten rules around shipping, tax compliance, and product safety. Sellers built around the lowest-possible price may find that strategy doesn’t go as far as it used to.

The sellers most likely to weather the shift are those that treat compliance and product quality as competitive advantages. Take consumer electronics accessories brand Anker, which built its brand in a highly competitive, commoditized space by offering reliable, well-made gear instead of racing to the bottom on price.

For many, making that type of shift won’t be easy. But it may be necessary as regulatory pressure ramps up and the window for offering ultra-cheap, lightly policed goods keeps narrowing.