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Temu Tepid About US Thanks to TikTok Turmoil

Temu Tepid About US Thanks to TikTok Turmoil
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Chinese eCommerce company Temu is reportedly looking beyond the United States for business growth.

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Temu, which had invested billions of dollars in the American market, is now looking to reduce its risk amid TikTok’s troubles with the U.S. government, The Wall Street Journal (WSJ) reported Monday (May 13), citing unnamed sources.

Temu — which has become America’s most popular shopping app next to Amazon — is more focused on attracting customers from Europe and other countries, the report said. It now expects less than a third of its sales this year to come from the U.S. That’s down from 60% in 2023.

Reached for comment by PYMNTS, a Temu spokesperson denied the WSJ’s sources’ claims, noting that while it is expanding into other countries, that does not mean it considers the American market less crucial.

“It’s therefore incorrect to assume that expansion into new markets automatically indicates reduced emphasis on the U.S.,” the spokesperson said. “To conflate global growth with diminishing U.S. importance is a false dilemma and demonstrates a misunderstanding of business strategy.”

The company — owned by Shanghai-based eCommerce giant PDD Holdings — spent $3 billion on online ads in the U.S. last year, making it one of the largest online advertisers in the country. Temu also bought air time during this year’s Super Bowl, and has gained a following in the U.S. among baby boomers and Generation X consumers.

In April, the U.S. passed the TikTok bill into law, with the legislation requiring that the social media platform’s China-based owner, ByteDance, either sell the company or be outlawed. Supporters of the law said the ban/divestiture is needed due to national security concerns.

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TikTok’s ongoing fight to alleviate data security concerns in Washington has acted as a wake-up call for Temu and PDD, per the WSJ report.

Concerns about similar actions against Temu have been bubbling at PDD headquarters since late 2022, leading the company to accelerate its efforts to expand outside of the U.S.

Meanwhile, TikTok and ByteDance last week filed a lawsuit asking a federal judge to review the constitutionality of a law.

“That law — the Protecting Americans From Foreign Adversary Controlled Applications Act… — is unconstitutional,” the companies said in the lawsuit. “Banning TikTok is so obviously unconstitutional, in fact, that even the act’s sponsors recognized that reality, and therefore have tried mightily to depict the law not as a ban at all, but merely a regulation of TikTok’s ownership.”

The outcome of the case could be “make-or-break for all the brands that have built their following on the platform.”

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