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Comment by shivasaxena | Hacker News Reader

Yes, disguising this regulatory capture as a concern for consumers on health and safety grounds is a great digression. I have also seen people raise concern about Slave labour for example.

This of course ignores the fact that European retailers often sell the same exact goods from the same Chinese factory, but at a 5-10x markup. And as said these goods are often same of better quality that what I would get from domestic retailers. In case of stickers the one from Temu were were of higher quality.

If EU was forcing Temu to abide by EU regulations on health and safety I would be all for it. But they are shutting down competition(change in customs rule on small packages etc) so our domestic retailers can stay inefficient and continue to bleed consumers.

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> This of course ignores the fact that European retailers often sell the same exact goods from the same Chinese factory, but at a 5-10x markup. And as said these goods are often same of better quality that what I would get from domestic retailers. In case of stickers the one from Temu were were of higher quality.

The rules are not about where the goods are produced, they are about whether or not the goods are safe.

> If EU was forcing Temu to abide by EU regulations on health and safety I would be all for it. But they are shutting down competition(change in customs rule on small packages etc) so our domestic retailers can stay inefficient and continue to bleed consumers.

Forcing Temu to abide by the regulations is exactly what the EU is doing here.

If it was solely about shutting down competition, there would surely be a handful of European shops selling all kinds of goods legal or not, just like Temu.

I don't think it's correct. The 150 eur exemption on custom duty on small packets has been revoked for years now, and now EU is also introducing some more tariffs.

https://www.bbc.com/news/articles/cq699ymm81vo

Try buying a fan on Temu which was actually FCC, CE, and UL tested and certified.

Sadly, all of these certifications cost money. That means companies who actually did the certification are forced to charge more for the same quality level.

Also, Temu is heavily reliant on infrastructure which was paid for by the taxes paid by local companies. The trick how Temu can avoid paying is by lying on the customs forms and declaring business transactions as valueless gifts. I’m not sure I would call fraud prevention as “regulatory capture”.

A fun one is some of the phone chargers on there. Someone at work bought one and found out quickly that there was 240V on the USB-C shell. They were lucky it didn't kill them. That was marked as CE / UL etc because the stickers are cheap.

Actually tested stuff costs money. Not a lot more but enough to push them down the ranks.

I've also had this experience; ordered a box of 10 chargers for $20 for the office, and of course they're built down to that price way below any standard of electrical safety. The "shell" was joined in a way that pulling on it to pull out the plug could detach the back leaving exposed live wiring.

> Also, Temu is heavily reliant on infrastructure which was paid for by the taxes paid by local companies. The trick how Temu can avoid paying is by lying on the customs forms and declaring business transactions as valueless gifts. I’m not sure I would call fraud prevention as “regulatory capture”.

I'm not aware them labelling business transactions as gifts. As far as I know there has always been 150 euros duty-free threshold and I have been using it to order traditional clothes from India for more than 15 years now.

The packages I get from Temu are clearly marked as commercial.

Also, in my mind it's arguable if local retailers paid for postal infrastructure. However what in arguable in my mind is that esselunga/carrefour sell me a wine opener for 12 EUR that I can buy for 2 EUR on temu. So I think you should also blame our domestic retailers a fraction of what you blame chinese retailers for bleeding us dry of our hard earned money.

In your example, do you think the 10€ price difference would be enough for hiring a customs agent, paying import duty, and VAT?

Because otherwise you’ve just said that Temu only works precisely because they don’t pay import customs like any local company would.

Good point, but custom duty on a 2€ wine opener is no where close to 10€. As far as I know on such goods it ranges for 0-30%.

Most of it is just outrageous markup since there's no competition in europe(save again for 1€ mom and pop chinese shops).

Not to mention european retailers would get huge bulk discounts on the sticker price of 2€.

As people have repeatedly pointed out to you, it's not just about VAT and import taxes (do not forget that most European countries have around 20% VAT, which is often also not paid). In contrast to Temu, European companies have to deal with:

- Safety testing to ensure it complies with European laws.

- Liability. If a product causes harm to someone, they can sue you.

- Warranty returns, if a product breaks, you have to repair it or replace it.

- Other returns, at least in the EU you can return a product bought online within two weeks, no questions asked. This should not be underestimated, e.g. for European online clothing stores, this is a significant chunk of their orders. People order three pairs of shoes, try them on and return the pairs that they don't want to keep. Best case, the product needs to be inspected by a (paid) human, worst case they have to trash it.

Temu does exactly none of that.

The reason we have these laws are: companies try to maximize their profits. Getting your house burnt down, your kid lead-poisoned, or getting a broken product without any course for replacement just sucks. So we make companies responsible for what they put on the market. Temu makes money by skipping all of that and externalizing the cost.

> The reason we have these laws are: companies try to maximize their profits. Getting your house burnt down, your kid lead-poisoned, or getting a broken product without any course for replacement just sucks. So we make companies responsible for what they put on the market. Temu makes money by skipping all of that and externalizing the cost.

I'm not against forcing Temu to follow EU regulations. I'm against this trumpian push for protectionism and changing of custom rules or straight-out ban under the guise of health and safety.

> Temu does exactly none of that.

I would say it's arguable since Temu also has returns and often european retailers are selling same exact goods from same factory.

However assuming you are correct, in you mind does it justify a 10 eur markup on a 2 eur wine-opener by esselunga?

It would serve our interests if we redirect a fraction of this outrage on temu/shein on our domestic inefficient retailers since it would motivate them to improve their own logistics and improve supply chain efficiency.

Here's the bill my German company would have to bill for shipping 1 2€ wine opener to 1 EU customer from Asia:

2€ goods (obviously)

+ 0.12€ duty HS 76151010 aluminum-based kitchen household items

+ 0.38€ import VAT

+ 12.50€ processing fee

=> price of 14.94€ and I make 0 profit

The problem in my opinion is not that Temu is paying too low an import tax rate, the problem is that Temu is for many parcels completely circumventing the customs system, thereby incurring costs but not paying their fare share.

Now I could try to import a 1m^3 box with 1000 wine openers, in which case the economics get better:

2000€ goods (obviously)

+ 120€ duty

+ 38€ VAT

+ 45€ processing fee

=> imported price of 2.20€ each

But now I need to warehouse those 1000 items in Germany and re-package them into local parcels for each customer

+2€ packaging material

+4€ postage for local parcel

=> now I can sell at 8.20€ and if I have 0 returns, 0 warranty cases and 0 issues, I'll barely break even.

Calculating in that I might have to deal with 10% returns, I need to charge 9€ per piece. And here's the kicker: If Temu would legally pay customs and deal with warranty and returns accoring to German law, they, too, would arrive at a similar price.

=> The Temu price only works because they deliberately break the law.

ah, what's the 12.50€ processing fee? Is it the DHL processing fees?

> But now I need to warehouse those 1000 items in Germany and re-package them into local parcels for each customer

Yes, it would be infeasible to ship such a low value good. Even on Temu I have to order a minimum of 29€. If you account for that, you should be able to see how a 10€ markup by esselunga/carrefour on imported price of 2.2€ is outrageous and reeks of lack of competition.

> Calculating in that I might have to deal with 10% returns, I need to charge 9€ per piece. And here's the kicker: If Temu would legally pay customs and deal with warranty and returns accoring to German law, they, too, would arrive at a similar price.

Temu now pays customs since the 150€ customs exemption has been gone for years now, and more importantly also the same VAT as your domestic retailer! So the 2€ price for the wine-opener I gave you includes customs and VAT.

For example my order of a few months ago of 38€ included a VAT of 6,09€

I hope you can see my point now that all this outrage against Temu/Shein is based on trumpian style misinformation about VAT and customs and a general "chinese bad, temu bad, we good" attitude which I personally find defeatist and embarrassing.

If we were to spend a fraction of this outrage on how bad our logistics and supply chains are for domestic producers(specially in DE: I used to work in retail dealing with EDI systems of EDEKA/REWE and domestic suppliers) we would be doing some thing productive.

Not to mention things like regulating/fining anti-competitive behaviour by GS1 and others.

When you start vocally defending them, you need to reflect on what you're defending.

Do you fundamentally understand why the local suppliers have to mark it up? That the EU retailer has to pay their people a minimum wage, with taxes. And those taxes pay for all the laws, courts, infrastructure, armies that make your life possible?

Temu is taking advantage of old shipping laws/agreement which make it cheaper to ship from China, tax free, than to ship locally. Your local supplier is in fact, in a tiny part, subsidizing Temu to send those packages.

They don't pay pensions, or worker safety. They don't have to make goods safely and risk death or permanent maiming with their products or their manufacturing processes.

So in essence, you're basically exploiting your local shippers and foreign workers for cheap goods. It's you, albeit in a tiny part, who exploits them just as much as Temu.

Yes, I think we all don't really consider it, but that's what's actually happening.

The law's actually about to change in the EU. Potentially these cheap parcels are about to have a flat fee of 2.25 EUR added and no longer be exempt from duty, so you might soon start seeing the true cost of those goods soon that everyone else was paying for you.

https://www.reuters.com/business/retail-consumer/eu-eyes-2-e...

Due to the complexity of real world systems, parasites appear. You've been supporting one of those parasites with your purchases. That's not a conscious choice on your part, I get it. We can't go through life and see all the little parasites and injustices the world and its complex systems make and stay sane.

UPU reforms from 2020 already phased in, your local post especially in NA and EU is has not been subsidizing PRC shipments for a while.

Read the link, UPU only solved a part of the problem/subsidy.

They have EU warehouses now. They're subject to EU legal process at this point. EU consumers can vote with their wallets, and seems like they're fine / appreciate TEMU business model and externality dumping (and middle man cutting). MOST of the world lives on cheap (affordable shit) without everything burning down and collapsing (at a higher rate sure), consumers in developed economies where products are questionably overbuilt - past some point safety is another avenue for regulatory capture - which is just parasitism on other spectrum. Maybe the problem is people don't want to pay 10000% more for "safer" items. Maybe all they're fine with marginal more deaths for significant less costs. The problem with regulatory wank is at regulatory treadmill doesn't always lead to market conditions consumers really want. Maybe most of it is correct, or maybe it is not.

I'm vocally defending our consumers including myself that are being bled dry by our retailers.

Instead of raising doubts about my character, it would be wise to consider my argument intellectually and see how you can justify a 10 eur markup on a 2 eur wine opener.

I've literally just explained it. That wine opener did not cost 2 Euros to reach you, a bunch of other people had to pay for you to get it for 2 Euros.

You're not advocating for consumers, you're advocating for a parasitic company that's subsidising your junk purchases using other people's tax money.

> This of course ignores the fact that European retailers often sell the same exact goods from the same Chinese factory, but at a 5-10x markup.

The same exact goods, or the same design made by the extra shift in the same factory and at lowest cost? EU companies will usually care about not being sued and not getting too many returns. Temu rando sellers care about items moved, regardless whether they work or not - corners can be cut.

You /can/ buy adequate stuff on Temu, and if it is indeed the exact same thing as sold by retailers (there's often many variations of a product with the same moulded shell), then you're probably safe. But you can also blatantly buy a huge amount of wildly unsafe shit on it, much more so than other retailers (Amazon's almost as bad, but not quite). And there's no reasonable way for a consumer to tell the difference. And to no-one's surprise, doing the research and taking on the risk of warranties and returns costs money.

It's entirely possible for Temu to comply here, but it would mean losing a lot of their competitive edge, because that edge has essentially been regulatory arbitrage (i.e. breaking the rules because they could get away with it).

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