The pre-Christmas period, as usual, saw an increased interest in online shopping services, and last year was no exception. Moreover, after two years, Czech e-shops experienced year-on-year growth in revenue.
In total, the amount reached 194 billion CZK, which is 5% more than in 2023. Overall, Czechs spent 228 billion CZK online last year, with 34 billion going to foreign online marketplaces.
Despite this, the number of domestic online stores slightly decreased. This decline can partly be explained by the fact that the biggest boom occurred during the COVID-19 pandemic when many brick-and-mortar stores had limited operations. As a result, there was naturally a higher interest in online shopping, which subsided somewhat after the lifting of all anti-COVID measures. Since 2022, the number of e-shops in the Czech Republic has been decreasing.
Last year, the decline was minor—just 200 fewer stores, bringing the total to 49,700. However, this does not mean that Czech online shops, especially smaller ones, have no reason for concern.
Quite the Opposite
Due to attractive prices on large Asian online marketplaces, which are becoming widely used in the Czech Republic, we can expect that Czech e-shops may soon face significant challenges. Popular Asian, particularly Chinese, online marketplaces such as Temu, Shein, and AliExpress pose a serious threat to Czech e-shops.
They offer extremely cheap products, and low prices are an enormous attraction not only for Czech customers. The Temu shopping app alone has approximately 92 million users in the EU. In a recent article, I primarily discussed toys, but this issue affects many other product categories as well.
Lack of Clear Rules
The Czech Trade Inspection Authority has recently received numerous complaints from domestic e-shops about Chinese online marketplaces failing to comply with legal obligations and misleading customers.
The concerns of Czech and, more broadly, European online retailers are understandable. There is no doubt that massive Chinese online marketplaces threaten domestic and European economies as a whole. Without clear and universally applicable regulations, not only Czech but all European businesses may soon struggle to compete. There is a real danger that a few enormous Chinese e-shops will dominate European retail.
Small and Medium Businesses at Risk
In the Czech Republic, small and medium-sized businesses are the most vulnerable, as they cannot compete with the dumping prices enabled by massive subsidies from the Chinese government.
Additionally, thanks to state support, these enormous Asian online marketplaces can offer free or suspiciously cheap shipping from China to the Czech Republic. Besides government subsidies, another factor contributing to the low prices is the exploitation of the 150-euro threshold, below which customs duties are not charged.
Customs, Taxes, Fees…
Chinese sellers are also likely evading taxes and various mandatory fees, such as recycling fees, which significantly reduces the competitiveness of Czech businesses.
Experts estimate that two-thirds of shipments from China are incorrectly declared, costing the EU approximately 50 billion euros annually. This is mainly due to the 150-euro customs exemption, which platforms like Temu exploit by splitting large orders into multiple smaller packages to avoid duties. Meanwhile, European suppliers must pay customs duties, VAT, and comply with strict data protection regulations.
Customs offices are also overwhelmed by the sheer volume of shipments. The EU plans to implement stricter tracking of goods starting in 2028, but experts warn that this timeline is too late given current trends.
The existing regulations fail to curb unfair competition from abroad and instead severely disadvantage domestic retailers.
Stolen Customer Data
The practices of Chinese online marketplaces rightfully raise concerns. Unfortunately, many consumers consciously overlook these risks due to the extremely low prices.
Cheap, low-quality goods of Asian origin are particularly attractive to young people with limited financial means, but not exclusively to them.
However, prioritizing low prices above all else can have serious consequences. For example, customer data is at stake. Apps like Temu and Shein collect vast amounts of user data and are required to share it with Chinese authorities.
This includes not only basic personal data but also detailed behavioral information. For instance, the Temu app can extensively access users’ phones, collecting unnecessary data such as Bluetooth and Wi-Fi access and even potentially recording audio via the microphone.
Risk Factors
Chinese online marketplace apps are therefore considered highly risky. Another potential hazard includes so-called dark patterns—manipulative practices in user interfaces designed to encourage excessive shopping and keep users engaged for as long as possible.
Temu and similar platforms utilize mechanisms that make users spend more time on their platforms, fostering potentially addictive behavior without sufficient consumer warnings or regulations, unlike their European counterparts.
Since Chinese companies are legally required to cooperate with their government, including intelligence agencies, there is a real risk that European citizens’ data will end up in the hands of the Chinese government. These risks cannot be underestimated.
With the rise of artificial intelligence, such databases can be used as powerful tools for influence and manipulation. A similar data security threat is posed by the Chinese social network TikTok.
It Could Be a Matter of Life and Death
Unfortunately, it’s not just data that is at risk—customers’ health and even lives could be in danger. Products from Chinese online marketplaces often lack mandatory certifications and may be hazardous, as previous findings have shown.
The trade-off for extremely low prices is often a higher content of carcinogens and other harmful substances. Temu, for example, faces numerous allegations in the European market, and its practices are under investigation by the European Commission.
Research from South Korea has revealed that some products sold on Shein and Temu contain levels of hazardous substances many times higher than EU regulations permit. Out of 144 tested products from Shein, AliExpress, and Temu, several failed to meet legal safety standards.
For instance, shoes sold on Shein contained excessive levels of phthalates—chemicals used to make plastics more flexible—one pair exceeding the legal limit by 229 times! Phthalates pose multiple health risks, including kidney and liver damage, increased allergy and asthma risk, and reduced sperm production in men.
Similarly, carcinogenic formaldehyde was found in caps sold on Shein, at twice the legal limit. Two bottles of nail polish from Shein contained dioxane—a carcinogen harmful to the liver—at 3.6 times the acceptable level, along with excessive methanol concentrations.
South Korean authorities also discovered that sandals sold on Temu contained lead at 11 times the permitted limit.
A Problem for All of Europe
New European legislation, developed over several years, aims to better address unfair practices by Chinese importers and improve consumer protection across Europe.
On December 13, 2024, the General Product Safety Regulation (GPSR) came into effect, ensuring that all products—whether purchased online or in physical stores—meet the highest safety standards. It imposes specific obligations on businesses to guarantee product safety, applying the same consumer protection rules to online marketplaces as to brick-and-mortar stores.
More Measures Are Needed
The European Commission has begun addressing the issue of defective products, particularly after identifying hazardous substances in items sold on these platforms. Initial complaints against Temu’s questionable practices were filed in May 2024 by 17 EU member states.
If violations are confirmed, Temu could face fines of up to 6% of its annual revenue, amounting to billions of euros. However, Temu is not the only Chinese platform potentially violating EU regulations—AliExpress and Shein may face similar consequences.
To prevent unfair competition from extremely cheap, often substandard goods, various measures are being considered, including stricter quality controls, better enforcement of GDPR regulations, and adjustments to customs and tax policies.
Further action is essential to protect the European market, consumer safety, and data security. The coming months will reveal the next steps in this regulatory battle.
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