Temu is one of the most successful Chinese platforms in the e-commerce space. Its success in Western countries saw exponential growth since its launch in the US in 2022 and Europe in 2023. However, this success has seen increased scrutiny over data protection, specifically aimed at Chinese companies, with TikTok being the prime example. As applications are collecting heaps of data on users and with the pricing of the products sold on Temu one can’t help but imagine that the profit margins can’t be big. So, the question remains, how is this company profitable?
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Data as a commodity
As technology has evolved, the consumer has also become a product. While you purchase products from companies, in the process, they collect data on you which can then be repackaged and sold. In the case of Temu, the Office of the United States Trade Representative thoroughly examined Pinduoduo, a retailer owned by Temu’s parent company. Pinduoduo was removed from Google’s Play Store for containing hidden malware that allowed it to access more data than normal undetected which raises red flags. It was also given its own section in the 'Notorious Markets for Counterfeiting and Piracy' report of 2022.
This unwanted attention has led Temu to distance itself from its parent company by moving its headquarters to Boston for US operations and Ireland for the rest of the world.
However, some users on social media have reported that their bank details were stolen after purchasing from Temu, some going as far as saying that their data was sold on the black market as they have seen their bank account slowly drained from funds to not be suspicious. Other users have reported similar concerns on Reddit which proves at least that this is not an isolated incident however no proof with regards to Temu's involvement has surfaced.
Data as a strategic asset
The US government has been making sure that the data of its citizens does not fall into the hands of outside parties that could use it to influence political outcomes or manipulate its citizens in any way similar to what happened with the Facebook–Cambridge Analytica data scandal. Some Chinese apps have been known to hand over their users' data to the government which is used for mass surveillance. Now if the Chinese apps that have seen immense success do the same for Western data, then that could be seen as a new form of strategic advantage for China which could exploit these vulnerabilities in many ways.
The Times: What is Temu and is it legit?
DW: Is China's Temu a data security threat for shoppers?
Politico: Booming Chinese shopping app faces Western scrutiny over data security