With Efforts to Ban TikTok: A New Chinese App Invades the U.S.

A new Chinese app called Temu has invaded the lives of Americans and has gained great prestige among them at a time when their country is seeking to ban the other Chinese app, TikTok, for security reasons.

According to statistics, Chinese apps are now remarkably dominating the app stores in the U.S.

Last February, the three most downloaded apps on Apple’s App Store were Chinese apps Temu, TikTok, and CapCut (TikTok video editor), according to MIT Technology Review.

While TikTok and Shein have been popular for a long time, the recent rise of Temu, a shopping app, illustrates a new fact: Chinese-made apps are having their heyday in the U.S.

On the other hand, the unprecedented popularity of Chinese apps in the U.S. has raised concern among decision-making circles in Washington, which places these apps under the guillotine of U.S. sanctions.

 

Rapid Rise

According to CNN, Temu, a new online shopping app, has become the most downloaded app in the U.S., overtaking Amazon and Walmart, despite only being a few months since its launch.

The company is headquartered in Boston, Massachusetts, but is a subsidiary of PDD Holdings, a Chinese-owned online retail giant that specializes in direct-to-consumer products.

Temu, which operates a large online store for almost everything from household goods to clothing and electronics, topped the app download rankings in the U.S. in early April 2023, a position it has maintained since last January.

According to Sensor Tower market data, some of the most popular platforms currently being downloaded in the U.S. are of Chinese origin, such as TikTok, CapCut, and fashion app Shein.

Temu saw 19 million downloads in the first three months of the year, bringing its total to 33 million downloads since it launched in the U.S. in September, according to Sensor Tower.

The timing of Temu’s launch also contributed to growth, according to Data.ai. The app launched just two months ahead of Black Friday, which typically marks the beginning of the holiday shopping season in the U.S. with big discounts.

Temu launched its own sales campaigns for the event, targeting consumers with less disposable income, Data.ai said in its report.

Weeks later, PDD also splurged on a 30-second ad that aired twice during Super Bowl LVII in February. Telling viewers to shop like a billionaire, the ad helped grow awareness in the U.S., with MAUs jumping 83% over January, according to Sensor Tower.

By taking advantage of the Super Bowl, we wanted to share with our consumers that they can shop with some sort of freedom because of the price we offer, a spokesperson for Temu told CNN.

Temu’s surprisingly low prices have drawn comparisons to Shein, an emerging Chinese fast-fashion company that also offers a wide range of inexpensive clothing and home goods and has been a hit in markets including the U.S.

With its rapid rise, Temu has become the second Chinese-made shopping app after Shein to become a hit in America in recent years, along with U.S.-based discount retailer Wish and Alibaba’s AliExpress, according to Coresight Research.

In the fourth quarter of last year, U.S. app installations for Temu exceeded those for Amazon, Walmart, and Target, according to Abe Yousef, a senior insights analyst at the analytics firm Sensor Tower.

“Temu soared to the top of both U.S. app store charts in November, where the app still holds the top position now,” he told CNN, referring to iOS and Android mobile app stores.

Yousef said the company had been particularly successful at acquiring new users by offering extremely low prices and in-app flash deals, such as 89% off certain items.

Temu has also been able to tap into growing mobile shopping in the U.S., according to a recent report from U.S. app analytics firm Data.ai. U.S. consumers spent more than 2.8 billion hours on shopping apps in 2022, a record for the market.

Temu, pronounced tee-moo, was launched last year by PDD, its U.S.-listed parent company formerly known as Pinduoduo. The company officially changed its name just this month.

PDD’s subsidiary Pinduoduo is one of China’s most popular e-commerce platforms, with approximately 900 million users. It made its name with a group-buying business model, allowing people to save money by enlisting friends to buy the same item in bulk.

On its website, Temu says it uses its parent company’s vast and deep network, built over the years to offer a wide range of affordable, quality products.

 

Security Concerns

The rise of Chinese shopping apps like Shein and Temu comes as leading U.S. fashion and lifestyle companies seek to reduce their dealings with China as concerns grow about escalating tensions between Washington and Beijing, according to Sheng Lu, a professor of fashion and apparel studies at the University of Delaware.

“Both brands primarily source their products from China. Temu mostly ships direct from there as well, while Amazon has distribution centers in the U.S.,” Sheng Lu said.

“This allows Temu to take advantage of China’s strengths in producing larger numbers of items with greater flexibility while benefiting from exemptions in the U.S. from import duties for low-value shipments,” he added.

“For Shein in particular, AI and big data play a crucial role in the app’s widespread reach and success,” Sheng Lu said.

“Shein’s management used data it collected from its apps and other social media channels to understand consumers’ shopping habits and lifestyles, which enabled the company to offer what was needed,” he revealed.

“Similar to TikTok, the rapid expansion of Shein and Temu in the U.S. has led to the collection of massive amounts of personal data from American consumers,” Sheng Lu said.

TikTok faces the possibility of being banned in the U.S. under the pretext that the data it collects could threaten national security and that its algorithm poses a threat to mental health. But so far, Temu and Shein have been spared.

Shein has become one of the world’s most popular and visible clothing brands, reaching $100 billion in sales in 2022 and appealing to consumers through cheap prices and influencer marketing.

However, Shein has been criticized for selling products made in workshops with unsafe working conditions, some of whom worked 17-hour days and were docked pay if garments had mistakes, according to Forbes.

According to Milton Mueller, a professor at the Georgia Institute of Technology, focusing on the nationality of a company is a crude criterion when it comes to security risks.

A study co-authored by Mueller, which was published in January, argues that the data collected by TikTok posed a security risk only if it came from people whose jobs were related to national security and their use of the app exposed sensitive data, a risk that could exist on any social network.

Meanwhile, the vast majority of American consumers ignore rumored security concerns.

 

Chinese Hegemony

TikTok is the first Chinese-owned app to enjoy significant success in the global market, but U.S. lawmakers and national security experts have warned that Chinese-owned apps could be vulnerable to data privacy breaches and censorship from the Chinese government.

As the U.S. has been trying to restrict access to the app at the state and federal levels since December 2022, it has also been joined by the European Commission, Canada, the United Kingdom, and others, all of which decided to ban TikTok on work phones for employees.

The basis of this ban is that the Chinese government can use TikTok to obtain sensitive information such as their GPS locations, and the same problem can face other Chinese apps that are very popular in the U.S. and Europe, according to reports.

During a hearing in the U.S. Congress last month, the CEO of TikTok faced accusations that the app was a threat to America.

Although it was not so popular in its country of origin, the Chinese TikTok app is the most popular in the U.S., with about 150 million users, or nearly half of the population, which raised the question about the reasons why American youth prefer these apps, despite the security concerns expressed by the U.S. authorities.

According to research firm Insider Intelligence, TikTok’s advertising revenue in the U.S. is expected to reach $6.83 billion this year, up from $780 million in 2020.

Chinese apps accounted for four of the five most-used apps in the U.S. this March, and algorithms are often credited as the secret to Chinese apps’ appeal, according to The Wall Street Journal.

According to Sensor Tower, Temu was the most downloaded app across U.S. app stores during the first weeks of March, followed by CapCut for video editing, TikTok in third place, and the fast-fashion app Shein, while the only non-Chinese Facebook was in the top five.

The American newspaper stated that these apps were founded by a new generation of young tech entrepreneurs who are looking for global growth and have a large pool of technical talent in China.

The Wall Street Journal indicated that although Temu is a shopping app, more than half of its workforce are engineers who work to attract users to navigate and purchase through the app.