PDD Holdings Invests in Local Fulfillment Amid EU Customs Duty Changes
Temu's parent company, PDD Holdings, is adapting its supply chain strategy to mitigate the impact of new European Union customs duties on low-value goods. The EU began applying a €3 duty per item under €150 starting July 1, ending previous de minimis exemptions that allowed such items in without charge. This change affects parts of PDD's business significantly due to increased fulfillment costs and delays. To counter these challenges, the company is accelerating local warehousing development and onboarding high-quality local merchants closer to customers. Co-CEOs Lei Chen and Jiazhen Zhao emphasized this strategy during an August 24 earnings call as part of a broader effort to streamline operations and improve delivery reliability in affected markets. Despite efforts to localize, PDD still relies heavily on cross-border suppliers based primarily in China for its low-cost goods. The new EU customs rules may lead to higher prices, reduced order volumes, and lower merchant participation on the platform.
Tickers: $PDD
Topics: customs_duties international_shipping local_fulfillment