Syed Imran Haider 
Shien and Temu have seen their popularity explode in the United States. This was after the companies went on an online marketing blitz.
In addition, they are also offering customers inexpensive products from China, such as a smartwatch for $15 and a pair of shoes for $3.
Competition
Likewise, discount shopping apps, such as ByteDance’s TikTok Shop, has also resulted in new competition for ecommerce companies in the United States.
Etsy, eBay and Amazon are some of the companies that have taken the hit. According to industry experts, most of the growth of these Chinese companies is due to a trade loophole.
The said loophole is called de minimis exception. It permits packages from China to enter the US duty-free, as long as they are valued at under $800.
David Zapolsk, the top public policy executive for Amazon, stated that this was a ‘concerning trend’. He also added that global regulators should examine this trend closely.
He said that it was worth noting how much the business models of such companies are subsidized. Zapolsky also said that the Chinese companies do not always enforce rules.
These include those applicable to the list and sale price of a product.
Tech Earnings
The growth of Chinese firms like Shein and Temu is likely to be a hot topic this week. This is because a number of tech companies are scheduled to reveal their earnings.
Companies like Amazon, Etsy, eBay and Meta will all share their second quarter earnings report this week.
Investors will track commentary about the impact of companies like Shein and Temu on the ecommerce marketplace.
Likewise, their ad spending will also be up for discussion, as it has resulted in the recent expansion of Meta.
Tech earnings season had kicked off last week, but the start had not been a good one. Alphabet reported its earnings for the second quarter on Tuesday.
The revenue showed a slight beat, but YouTube ad sales did not live up to expectations. This saw the stock price decline by 5% the next day.
On the same day, there was a drop of 12% in Tesla’s share price. This was the biggest drop for the company since 2020.
The Expectations
Microsoft, Apple, Qualcomm, Snap, Block and Intel are also scheduled to report their earnings this week. Amazon is scheduled to share results on Thursday.
According to expectations, the company’s revenue should have undergone growth of about 11% to reach $148.6 billion.
However, its net income is expected to see an increase of 63% as compared to a year earlier. This is because of the cost-cutting moves that Amazon has made.
It includes the thousands of layoffs. Even though retail is not its primary growth engine anymore, Amazon still generates most of its revenue from it.
60% of the goods that are sold on Amazon belong to third parties. This is where Shein and Temu come in. It has provided merchants with a new way to get their products to US customers.
Since they eliminate intermediaries, they are able to offer low prices for products. Moreover, they choose slower delivery options to keep the costs down.
