EU Raids Temu's Dublin HQ in State Subsidy Investigation

European Commission Conducts Surprise Inspection at Chinese E-commerce Giant

The European Commission has conducted an unannounced raid at Temu's European headquarters in Dublin, Ireland, as part of an investigation into potential illegal state subsidies from China. According to multiple media reports including Financial Times, Reuters, and Bloomberg, the inspection took place last week at the offices of the Chinese online marketplace that has rapidly become one of Europe's most popular shopping platforms.

Foreign Subsidies Regulation in Action

The raid was conducted under the EU's Foreign Subsidies Regulation, which came into effect in 2023 to address market distortions caused by foreign government support to companies operating in the European single market. The regulation specifically targets non-EU companies that may benefit from unfair state aid, giving them an advantage over European competitors.

'This represents a significant escalation in the EU's scrutiny of Chinese companies operating in Europe,' said a Brussels-based trade analyst who spoke on condition of anonymity. 'The Commission is showing it's willing to use its new regulatory powers to examine the business practices of major Chinese tech firms.'

While the European Commission confirmed conducting an 'unannounced inspection' at 'a company in the e-commerce sector,' it did not specifically name Temu. However, multiple sources within the Commission confirmed to media outlets that the target was indeed the Chinese e-commerce giant.

Temu's Rapid European Expansion

Temu, owned by Chinese parent company PDD Holdings, has experienced explosive growth in Europe since launching in April 2023. According to recent data, the platform now boasts approximately 116 million average monthly users across the European Union. The company's business model relies on heavily discounted consumer goods shipped directly from China, often taking advantage of a customs waiver on parcels valued under €150.

This customs exemption has become a major point of contention, with European retailers arguing it gives platforms like Temu and Shein an unfair competitive advantage. The EU has announced plans to scrap this duty exemption by the end of 2026, but the current investigation suggests regulators aren't waiting for that deadline to address competition concerns.

Multiple Investigations Underway

This isn't Temu's first regulatory challenge in Europe. The company is already under investigation under the EU's Digital Services Act for allegedly failing to prevent illegal product sales on its platform. A separate probe examines potentially prohibited methods the platform uses to entice customers to make purchases.

'We're seeing a pattern of regulatory concerns with these Chinese e-commerce platforms,' noted Margrethe Vestager, Executive Vice-President of the European Commission for a Europe Fit for the Digital Age, in a recent statement. 'Our job is to ensure fair competition and protect European consumers and businesses.'

The Foreign Subsidies Regulation allows the Commission to impose fines of up to 10% of a company's annual turnover for violations. Companies found to have received distortive foreign subsidies may also be required to offer concessions or implement corrective measures.

Broader EU-China Trade Tensions

The raid comes amid growing tensions between the EU and China over trade practices. European manufacturers have increasingly complained about cheap Chinese imports flooding the market, particularly through e-commerce channels. The investigation into Temu follows similar scrutiny of other Chinese companies, including security equipment manufacturer Nuctech, which is facing the EU's first formal foreign subsidies investigation.

Chinese authorities have consistently denied providing unfair subsidies to companies, arguing that their industrial policies are legitimate tools for economic development. However, EU officials remain concerned that state support allows Chinese companies to offer artificially low prices that European competitors cannot match.

Temu has not yet publicly commented on the raid. The company's Dublin office serves as its European headquarters, with PDD Holdings registered in the Cayman Islands but listing Dublin as its principal office address. As the investigation continues, industry observers will be watching closely to see how this case develops and what implications it may have for other Chinese companies operating in Europe.