Can European E-Shops Survive China's E-Commerce Takeover?

Can the EU Save Local E-Shops from China’s Unfair Advantage?

The rapid rise of Chinese e-commerce platforms like Temu, AliExpress, and Shein is reshaping Europe’s online retail landscape. These platforms offer consumers ultra-low prices, often bypassing import taxes and undercutting local businesses. As a result, European retailers - many of which are small and medium-sized enterprises (SMEs) - are struggling to survive in an increasingly hostile market. While European businesses contend with rising costs and stringent regulations, Chinese sellers exploit loopholes that give them an unfair advantage, effectively reshaping the rules of the game. If the EU fails to act decisively, the future of domestic e-commerce could be at risk.

The Rise of Chinese Online Marketplaces

In recent years, Chinese e-commerce giants have aggressively expanded into European markets, offering consumers products at prices local retailers simply cannot match. By shipping goods directly from China and leveraging loopholes like the de minimis rule—where packages under €150 are exempt from VAT—these platforms avoid many of the costs that European businesses must bear. In 2023 alone, Temu and Shein saw exponential growth in Europe, with Shein generating an estimated $32.2 billion in sales worldwide. Meanwhile, domestic retailers continue to see declining revenues, unable to compete on price.

Meanwhile, domestic retailers across Europe - from Germany to France and the UK - continue to report declining revenues, unable to compete on price. This influx of low-cost, mass-produced imports has triggered concerns among domestic retailers, who argue that Chinese sellers operate under different standards, benefiting from looser regulations on taxation, labor laws, and product safety. Meanwhile, European e-shops must comply with rigorous consumer protection laws, VAT obligations, and higher operational costs, making it impossible to compete on equal footing.

A Battle for Survival: The Struggles of European Retailers

For small and medium-sized e-commerce businesses across Europe, the competition is proving to be brutal. Many local retailers are already struggling with inflation, rising wages, and energy costs, making it nearly impossible to compete with the low-cost model of Chinese platforms.

Some key disadvantages European retailers face include:

Higher taxation – European businesses must charge VAT on all sales, while many Chinese sellers can exploit tax exemptions by mislabeling shipments or using third-party logistics to obscure product origins.
Strict regulations – EU companies face rigorous consumer protection, product safety, environmental standards, and return policy requirements. Chinese sellers, however, often evade these obligations by operating without a legal entity in the EU.
Advertising restrictions – Local businesses must adhere to strict advertising rules, including bans on misleading promotions and aggressive discount strategies, whereas Chinese platforms flood social media with unchecked ads, often using deceptive tactics.

Additionally, concerns have been raised about product quality and safety, as many imported items fail to meet EU standards but still find their way into consumers’ hands through online marketplaces. In 2024, the European Commission opened an investigation into the Chinese e-commerce platform Temu for potential violations of the Digital Services Act (DSA), citing concerns about non-compliant and potentially dangerous products being sold on the platform.

A recent Toy Industries of Europe (TIE) survey found 80% of toys bought from third-party traders on online marketplaces fail EU safety standards and could be a danger to children. TIE calls for urgent EU action to close legal loopholes and make online marketplaces fully responsible for ensuring the safety of the products they host when no other EU-based entity is accountable.

Beyond safety concerns, this unchecked import wave is also threatening European jobs and tax revenues. If European retailers continue to close, thousands of jobs, especially in smaller cities and rural areas could be lost, while governments face declining tax income due to VAT avoidance.

EU Regulations: Too Slow to Respond?

Measures such as the DSA and Digital Markets Act (DMA) were introduced to hold online platforms accountable. These laws aim to improve transparency, ensure fair competition, and protect consumers. However, while these measures sound promising, their enforcement remains weak. Many Chinese sellers lack a physical presence in Europe, making it nearly impossible for authorities to enforce tax laws, product safety standards, or advertising regulations.

The major source of the problem is a lack of legal responsibility. In the words of Catherine Van Reeth, Director General of TIE:

“Unsafe toys from sellers who ignore EU rules will keep flooding the EU unless online marketplaces are given more responsibility for the safety of the toys sold on their platform where no-one else In the EU has that responsibility. Unless every player in the value chain has to play its part, a legal loophole will remain. Along with making sure there is always someone responsible for protecting children and EU consumers, we need better enforcement of the existing rules.”

Without stronger action, existing regulations risk being little more than a bureaucratic formality, unable to curb the dominance of Chinese e-commerce platforms.

The Future of European E-Commerce

The survival of domestic e-shops hinges on the EU’s ability to act swiftly and decisively. Policymakers must close regulatory loopholes, enforce fair competition rules, and ensure that all sellers, regardless of their location, play by the same rules.

Key reforms under discussion include:

Tightening VAT enforcement, ensuring that all imports - regardless of value -are taxed appropriately.
Stricter product safety checks at EU borders and greater liability for online marketplaces hosting third-party sellers.
Mandatory EU representation for foreign sellers, requiring Chinese vendors to establish a local legal presence, making enforcement easier.
A complete overhaul of the de minimis rule, ensuring all imports are subject to VAT, eliminating the tax-free advantage currently enjoyed by foreign sellers.

Some EU lawmakers have already proposed such reforms, recognizing that the current system overwhelmingly benefits foreign sellers at the expense of European businesses. However, without rapid implementation, European e-commerce may soon be dominated by non-European entities, risking not only business closures but also a significant loss of digital sovereignty.

Without these steps, European businesses will continue to struggle, risking job losses, declining tax revenues, and an e-commerce sector increasingly controlled by foreign giants. If Europe wants to maintain a healthy, competitive, and fair digital market, urgent action is needed - before it’s too late.

Policymakers, businesses, and consumers alike must recognize the stakes and push for reforms that level the playing field. The future of Europe’s digital economy depends on it.

Tomáš Zdechovský

Czech Politician | Member of European Parliament (MEP)