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European Online Stores Complain of Unfair Competition from China, Call for Better Market Oversight

COMMERCEEuropean Online Stores Complain of Unfair Competition from China, Call for Better Market Oversight

Chinese marketplace platforms are capturing a significant share of the European e-commerce market, with the number of their customers in Europe rapidly increasing. In 2023, in the EU countries and the UK, 40% or more of consumers made purchases from Chinese sellers in e-commerce. However, the operations of Chinese sellers have raised several concerns, including the methods and scope of personal data collection and its subsequent use, the safety of products sold to European consumers, advertising practices, and unfair competition methods that harm companies operating within the EU. These companies emphasize that they are not afraid of competition from Asia but urge regulators to better enforce the rules that should apply to all market players.

“The e-commerce industry frequently mentions that it is exposed to unfair competition, that different rules apply to companies operating within the EU compared to those outside the EU. We recognize this problem and see that the existing regulations are sufficient; the issue lies in their enforcement. Therefore, we have initiated work at the Ministry of Development and Technology to effectively implement existing European regulations. The government’s work program already includes a bill concerning the regulation of foreign subsidies, and recently a bill on market surveillance authorities has also been introduced – precisely to enforce existing regulations. At the EU forum, we are considering how to support European e-commerce businesses, as we want them to operate under the same conditions and have the same competitive opportunities as companies from Asia,” said Ignacy Niemczycki, Deputy Minister of Development and Technology, to Newseria Biznes.

According to a recent report by the e-Chamber (“State Support for the Development of Chinese Exports in E-commerce”), Chinese exports in the e-commerce channel have grown rapidly in recent years and have been a significant driving force for China’s weakening economy during the COVID-19 pandemic. Beijing authorities report that in 2023, the value of sales in the e-commerce sector was over $260 billion. However, according to iResearch estimates, this value may be much higher, close to $1.1 trillion. About one-third of the total value of Chinese e-commerce exports goes to the United States, but Europe, with approximately 584 million potential consumers, is also an attractive market. Key recipients of Chinese e-commerce include the UK and Germany.

Chinese e-commerce exporters offer their products to European customers through both Chinese and Western e-commerce platforms, as well as through their online stores. Importantly, the number of their customers in Europe is growing dynamically – according to Statista data, in 2023, in EU member states and the UK, 40% or more of consumers made purchases from Chinese sellers in e-commerce.

However, the activities of Chinese enterprises conducting e-commerce in the EU raise concerns. These include the methods and scope of personal data collection and its subsequent use, product safety, advertising practices, and unfair competition methods that harm companies operating within the Union.

“When sales occur from non-EU territories, such as Asia, it turns out that their products do not always comply with EU regulations, especially regarding safety. As a result, they can have lower prices because their production costs are also lower. This creates significant difficulties in enforcing EU regulations on non-EU entities. We also see this in other areas, such as personal data protection and consumer rights protection,” said Witold Chomiczewski, legal advisor and representative of the Electronic Economy Chamber for Legislation.

He emphasized that competition from non-EU entities impacts domestic companies subject to EU regulations and must bear high costs related to compliance with EU requirements, particularly regarding safety. This limits their ability to compete on price.

“This significantly impacts the industry. Considering the numerous new legal regulations appearing in the EU e-commerce market – such as GDPR or the Omnibus Directive affecting the presentation of promotional prices – compliance always entails high costs for EU entities. It requires investments in rebuilding online interfaces, service changes, often programming changes that also involve significant costs, organizational changes, or the need to launch new business processes. However, non-EU entities that do not comply with EU regulations do not incur these costs. This allows them to offer their products cheaper while maintaining higher margins. EU companies simply cannot match these prices without selling below cost,” explained Chomiczewski.

An additional problem is that Chinese sellers can count on significant support from state authorities. According to the e-Chamber report, since 2020, Beijing has intensified the implementation of support measures for e-commerce exports, such as subsidies and other forms of financial assistance, the expansion of extensive infrastructure, and favorable regulations.

“As European and Polish entities, we are not afraid of competition, but we appeal for regulators to ensure good enforcement of the rules that should apply to all market players,” said Marta Mikliszańska, Director of Public Affairs and ESG at Allegro Group. “If platforms from outside the EU target their services to Polish and European consumers, they should be treated and follow the same rules as local players and entrepreneurs. Unfortunately, this is not happening. We already see actions from regulators in Poland and the EU, but it is happening slowly and poses a significant challenge for control institutions and the European Commission itself. I think this issue will be one of the leading topics in the next term of the European Parliament and the new European Commission.”

The e-Chamber notes that regulatory authorities in the EU have already taken actions to force Chinese e-commerce giants to adapt their business models and operations to EU standards. However, these actions have primarily focused on user safety, privacy protection, transparency, and freedom of speech. The issue of competitive advantage that Chinese companies have over their European counterparts remains unresolved.

“We can consider certain legal changes and improvements, but the key is enforcing existing regulations. For example, personal data protection and consumer protection apply in an extended territorial scope. If a non-EU entity addresses its offer or processes personal data of consumers from the Union, it should comply with these regulations. Now, it is crucial for supervisory authorities responsible for enforcing these regulations to be equipped with the necessary means – including financial resources – to enforce these rules, which is often a significant organizational challenge,” said Chomiczewski.

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