Raid on Temu’s European headquarters: is the Chinese government sponsoring?

EU inspectors raided Temu‘s European headquarters in Dublin last week. They are investigating Chinese state aid that could potentially distort the market and competition in Europe.

Unfair aid

“We can confirm that the Commission carried out an unannounced inspection at the premises of a company operating in the e-commerce sector in the EU, under the Foreign Subsidies Regulation,” a Commission spokesperson told Bloomberg. The Commission did not disclose the identity of the company or the location of the inspection.

The regulation in question (Foreign Subsidies Regulation or FSR) focuses on unfair foreign aid to companies and is mainly used against Chinese companies. After all, it is known that the Chinese government gives companies competitive advantages with, among other things, interest-free loans, tax breaks, or preferential tax treatment.

Raids usually follow when regulators have indications of violations, either through whistleblowers or their own investigations. Violations can result in fines of up to 10% of global annual turnover.