Chinese Suppliers Protest in Front of PDD Headquarters
Bear Full Losses from 'No-Return Refunds'
Temu, a shopping application rapidly establishing itself in the global market by selling ultra-low-priced products, has faced backlash from its merchants. These merchants claim that Temu's "refund without returns" policy and delayed payment settlements are causing their profits to plummet.
According to local Chinese media and the Hong Kong South China Morning Post (SCMP) on the 30th, about 100 Temu merchants protested in front of the Guangzhou headquarters of Pinduoduo (PDD) Holdings, which operates Temu. The merchants entered the office building but dispersed after police intervention, the media reported.
On the 29th, Chinese suppliers protested in front of the PDD Holdings office in Guangzhou, China, regarding the Temu refund policy issue. (Photo by China eMagazine)
Temu's main business model is "ultra-low prices." For example, dresses are sold for $6.92 (about 9,500 KRW) and sandals for $3.99. However, merchants argue that this low-margin, high-volume sales approach places excessive responsibility on sellers when customer complaints or refund requests arise during the supply process. There are also complaints that when consumers request refunds, Temu does not collect the products citing logistics costs and simultaneously withholds payments to the merchants. In other words, all losses from the so-called "refund without returns" policy are passed on to the sellers.
One merchant who participated in the protest introduced himself as a "victim" and lamented that although he made sales of 40 million yuan (about 7.647 billion KRW) through Temu last year, most of his profits were effectively wiped out due to a 3 million yuan penalty deducted for customer refunds and complaints. He explained, "If a customer wants a refund, the product is not returned, but the merchant who sold the product is fined more than twice the sales price," adding, "As sales increased, the penalties also increased."
Another merchant claimed that PDD has not offered any solutions despite merchants raising these issues. He said he sold goods worth 800,000 yuan on Temu, but the platform is withholding 300,000 yuan due to penalties and refund issues.
A merchant selling mobile phones in Shenzhen reported losses of $80,000, including unpaid amounts, due to similar problems. He complained that about 200 smartphones are tied up because of Temu's "refund without returns" policy and that he is still waiting for payment. According to this merchant, Temu imposes fines on sellers up to five times the product's sales price.
However, Temu stated that these merchants are cases of failing to properly comply with company policies and that some disputes are ongoing. In a statement released the day before, Temu said, "They are dissatisfied with Temu's after-sales service approach. These individuals refused to resolve disputes through the normal mediation and legal channels specified in the seller contract," adding, "The company is actively cooperating to find stable solutions." Following this news, Pinduoduo's American Depositary Receipt (ADR) stock price fell 5.8% over two days on the 29th and 30th (local time).
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