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Temu sellers struggle with disputes amid complex company structure outside China

  • Sellers on the app from China’s PDD Holdings are finding it difficult to resolve disputes over withheld earnings, which must be done outside the mainland

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The logo of Temu, an e-commerce platform owned by PDD Holdings, seen on a mobile phone displayed in front of its website on April 26, 2023. Photo: Reuters
Wency Chenin Shanghai
Merchants selling on the Chinese international e-commerce app Temu that have protested against the platform’s harsh fines for after-sales issues are struggling to address disputes through legal channels on the mainland because of the company’s complex ownership structure, according to lawyers.
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Merchants sign agreements with Temu through its operator Whaleco’s entities in either Dublin or Boston, depending on where they sell, according to sellers and the platform’s official website. These agreements specify that disputes must be submitted to the Hong Kong International Arbitration Centre, placing them outside the jurisdiction of domestic judicial and regulatory bodies.

Temu claims its global headquarters as Boston in the US. But like its China-based sibling Pinduoduo, Temu is owned by PDD Holdings, which operates mainly out of Shanghai, although it changed its principal business address to Dublin last year.

“Given the cross-border nature of these transactions, it’s logical for both parties to agree on a dispute resolution method and set Hong Kong as the arbitration venue,” said Wu Libin, senior partner at M&T Lawyers. “However, many merchants are unfamiliar with Hong Kong’s legal framework, and the high costs of litigation pose a significant barrier to seeking legal remedies.”

Temu has quickly grown its market share globally in the e-commerce industry with aggressively priced goods that ship directly from China. Photo: AP
Temu has quickly grown its market share globally in the e-commerce industry with aggressively priced goods that ship directly from China. Photo: AP

Merchants said that the company’s agreements disadvantage them, with updates often appearing as pop-up windows on the seller’s back-end system, requiring immediate consent to continue operations. This has resulted in some cases to hundreds of thousands of dollars in fines and withheld earnings over issues such as alleged intellectual property infringement and poor product quality.

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