Where the Temu shopping app products come from

Low prices are intended to entice Western customers to buy directly in China on the Temu shopping app. But where do the products come from – and how does the business work?

The shops in the largest wholesale market in the world are lined up like a labyrinth – there are around 75,000 of them. Here you can find earrings, bracelets, home decorations, picture frames, vases, small electrical appliances, children’s toys and much more. In many corners, goods are packed in plastic bags and large packages are wrapped with adhesive tape. Around 80 percent of all Christmas decorations worldwide come from here.

This market in the eastern Chinese city of Yiwu is the international hub, a globally networked trading center – also for shopping apps such as Temu, Shein and TikTok Shop. According to the company, 62 percent of the jewelry retailers that supply Shein come from Yiwu. With Temu, according to estimates, various local middlemen who deal with the ARD have spoken to up to 50 percent of traders in Yiwu stores.

Temu takes over the logistics

“Yiwu is like a big department store, you can find all kinds of goods, and the prices are much cheaper than elsewhere. The price advantage is the most important thing for us,” said 26-year-old middleman Wu, who started Temu business in August. He mainly supplies the platform with hats and scarves. With Temu, he says, he earns the equivalent of around 2,500 euros a month.

His day looks like this: First he looks for suitable products that he thinks will sell well on Temu. Either on the wholesale market or on online sites where factories offer their products directly. Then he buys them, packs them and sends them to Temu. “We used to have to do everything ourselves: contact international logistics companies and sell the goods directly abroad ourselves.”

Now everything is much easier because Temu does all the work for him: “We traders supply Temu with goods. The company has warehouses in Guangzhou in the south of China. We send our goods there, and then Temu takes care of everything else and sends them to different locations Countries.”

Packing packages at night alongside a full-time job

29-year-old Wang Qihang has also discovered Temu as a side income: Since May, he has earned the equivalent of around 13,000 euros – in addition to his full-time job in an office. After work, he says, he usually packs goods in his apartment until one in the morning. And then sleeps in the middle between the packages: “When I started, I only lived in a small room. The goods were piled up in my room. It was almost impossible to get through.”

But his landlord didn’t like the fact that the goods were piled up to the ceiling at some point: “My landlord got angry and threw me out. Now I’ve rented a one-room apartment again, which is of course full of goods again.” But it cannot be just any goods. The quality has to be right, says Wang Qihang. If Temu is not satisfied with the quality, the goods will be returned to the retailers.

There are even penalties if customers complain about defects. Ma Chao, who sells Christmas decorations through Temu, says: “If things go badly and the customer discovers quality defects, then we are punished. The fine is five times higher than the price. So if a product cost the equivalent of six euros, then I have to Pay a fine of 30 euros.”

Above all, speed counts

The ARD was able to view contracts that traders must sign when registering with Temu. Accordingly, Pinduoduo, the parent company of Temu, with which the contract is concluded, reserves the right to impose penalties and determine the amount of the penalties if traders violate the terms of the contract. Temu did not respond to a subsequent interview request with questions about the collaboration between Temu and the dealers.

Anyone who wants to work and deliver for Temu must, above all, be quick. A Temu employee said this to an audience at an online trade fair in Yiwu at the beginning of December. The platform advertises itself, as do its competitors Shein and TikTok’s shop. In addition, hard work and innovation are required, and manufacturers and retailers must have an efficient supply chain, she explained. Temu itself says that the low prices come about through direct sales – there are no other middlemen or storage facilities on the way of the products from China to Europe.

But Temu can cut out middlemen not only on the way there, but also in China itself. The platform not only sources goods from middlemen, but also from many different factories and manufacturers in China. That’s even cheaper.

All dealers are specialized

Qian Longwei lined up in front of Temu’s trade fair stand in Yiwu. He has a factory in Yiwu, it is 1,800 square meters in size and he has 25 employees, he says. He proudly shows a video of it on his cell phone. There are boxes and packaging materials everywhere and long tables where workers make air mattresses and other inflatable swimming items. He says he sells them directly to Temu from his factory. A swimming ring costs the equivalent of one euro per piece. For Temu, this is the fastest supply chain. And the lowest purchase price.

Wang Songwei, another factory owner who also has a store in the Yiwu wholesale market, said manufacturers in Yiwu city have perfected the ability to produce the cheapest goods through division of labor. Everyone concentrates on one thing. It is produced in small units and is very flexible – that is the city’s strength.