👩‍🍳 How we use AI at Tech in Asia, thoughtfully and responsibly.🧔‍♂️ A friendly human may check it before it goes live. More news hereTemu, owned by PDD Holdings, has resumed direct shipments from China to the US. This follows recent advancements in trade negotiations between Washington and Beijing.Some items previously removed from Temu’s US marketplace last month have been reintroduced.A seller from Guangdong said products, including dresses, became available for sale in the US on June 11.However, many items remain offline under Temu’s “full custody” model, where the platform manages logistics, pricing, and tariffs.As of June 14, Temu’s US website featured items shipped directly from China, such as a nylon hiking backpack.This product had been unavailable for reviews between May 7 and June 2 but has now been reinstated.🔗 Source: South China Morning Post🧠 Food for thought1️⃣ The de minimis roller coaster reshapes cross-border e-commerce economicsTemu’s direct shipping resumption highlights how significantly the de minimis rule influences international e-commerce business models.When the US suspended the $800 duty-free threshold for Chinese imports in May, it fundamentally altered the economics of cross-border e-commerce, forcing platforms like Temu to shift to local fulfillment models to remain competitive 1.This policy reversal comes after Chinese e-commerce retailers faced cost increases of 10-25% across various product categories, significantly impacting their ability to maintain the ultra-low pricing strategy that fueled their rapid US market growth 2.The temporary reinstatement of the de minimis exemption represents a critical lifeline for these platforms, as it allows them to once again ship low-value goods directly from China without incurring duties that would make their business model unsustainable 3.This pattern of regulatory change followed by business model adaptation demonstrates how e-commerce platforms must maintain operational flexibility to navigate unpredictable trade policies, a capability that larger, well-capitalized companies like PDD Holdings (with $364.5 billion in cash reserves) are better positioned to manage 4.2️⃣ PDD’s “full custody” model creates unique tariff vulnerabilityTemu’s struggle with US tariffs reveals a specific vulnerability in its parent company’s business approach that differs from competitors in cross-border e-commerce.Under PDD’s “full custody” model, the platform assumes responsibility for listings, pricing, logistics, and crucially, tariffs—creating direct financial exposure to trade policy changes that other marketplace models can pass on to sellers 3.When the de minimis rule was suspended, Temu faced a stark choice: absorb significant cost increases that would undermine its ultra-low price positioning, or dramatically alter its operational model by shifting the tariff burden to merchants—ultimately choosing the latter to preserve margins 2.This strategy shift contributed to PDD’s 47% earnings decline in Q1 2025, demonstrating how deeply trade policies can impact business performance when a company takes on supply chain responsibilities traditionally managed by individual merchants 1.The recent trade developments have allowed Temu to partially revert to its original model, but the episode highlights how PDD’s approach—which helped it achieve its impressive 24.63% profit margin—also creates unique exposures to regulatory shifts compared to traditional marketplace platforms 4.3️⃣ Trade policy whiplash accelerates supply chain regionalizationThe Temu case illustrates a broader trend where unpredictable trade policies are forcing e-commerce businesses to develop regional supply networks rather than relying on direct China-to-consumer models.Despite the current trade tensions easing, experts warn this represents a “calm before an inevitable e-commerce storm,” with import volumes at major US ports already dropping significantly—signaling deeper supply chain restructuring 5.The on-again, off-again nature of tariffs and de minimis rules has driven companies to explore nearshoring and supply chain diversification as strategic imperatives rather than temporary responses, with many businesses stocking up on inventory in anticipation of future policy changes 6.For large platforms like Temu, this has meant developing multi-regional fulfillment capabilities—evidenced by their rapid pivot to “local warehouse” models when direct shipping became economically unfeasible 7.The EU’s consideration of similar measures, including a €2 handling fee for low-value packages, signals that this is a global trend that will require e-commerce businesses to maintain parallel supply chain strategies across different regions rather than relying on a single cross-border model 8.Recent Temu developments

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