Chinese e-commerce company Temu has more than doubled its sales in the UK over the past year, according to a report by the Financial Times on October 3. The newspaper attributes this growth to the utilization of small parcel duty exemption regulations.
Temu recently disclosed that its sales in the UK reached $171 million in 2025, a 171% increase from the previous year. The company's model involves selling products from regions with lower prices directly to consumers in the UK, where prices are higher.
In the UK, parcels valued under £135 are exempt from duties. This has allowed Temu and other e-commerce companies, such as Shein, to attract customers through extensive online advertising while taking advantage of the duty exemption for low-value items. According to the UK’s HM Revenue and Customs, the total value of duty-free parcels shipped from China to the UK is expected to exceed £3 billion for the 2024-2025 period, more than double the £1.3 billion reported the previous year.
In response, the UK Treasury has announced plans to abolish the small parcel duty exemption starting in 2028. However, the Financial Times reports that there are concerns this will not deter the influx of Chinese e-commerce companies over the next two years.
The European Union has also tightened regulations regarding Chinese e-commerce duty exemptions. Since July, a temporary duty of €3 has been imposed on online purchases valued under €150, with plans for a complete overhaul of the duty system for low-cost imports by 2028.
The Financial Times also noted that while Temu generates significant revenue in the UK, it employs very few people there. In 2024, the company reported $63 million in sales and $3 million in profit but had no employees in the UK. Last year, it made $6 million in profit with 31 employees. Temu's UK subsidiary stated that its primary business purpose is to provide operational support to other affiliates and reported paying $985,000 in corporate taxes in the UK last year.
Previously, the United States halted duty exemptions for small parcels from China and Hong Kong starting in May 2022, expanding this to all countries in July. This action was taken under the International Emergency Economic Powers Act (IEEPA). A U.S. auto parts importer has since filed a lawsuit seeking to restore the duty exemption, but a federal court ruled against the plaintiff in August.
In France, legislation has been passed imposing fines on e-commerce companies like Temu and Shein for promoting the so-called 'fast fashion' model, which encourages consumers to buy and discard clothing quickly. According to Reuters, the French Senate has approved amendments to regulate online fast fashion companies.
* This article has been translated by AI.
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