Temu, a subsidiary of Pinduoduo, has reportedly been subjected to a surprise inspection by the European Union, fearing that it may receive subsidies from the Chinese government. Last week, the EU's competition regulator raided Temu's European headquarters in Dublin, Ireland, to investigate whether it had received unfair subsidies, according to foreign media reports.

Suspected of receiving unfair subsidies from China

The Commission said it had conducted an unannounced on-site inspection of a company actively engaged in e-commerce within the EU under the Foreign Subsidies Regulation, but did not disclose the name of the company involved.

The Foreign Subsidies Regulation aims to combat unfair competition caused by non-EU companies receiving government subsidies, and companies that violate the regulations may be fined up to 10% of their total annual turnover. The report points out that regulatory agencies usually conduct surprise inspections only after they have certain clues about violations, which often prompt companies to make concessions or cooperation in exchange for mitigation.

In addition to Temu, the EU also launched an in-depth investigation into the Chinese security inspection equipment manufacturer Nuctech based on the regulations. In a statement, the Commission said it was concerned that its counterparts would receive foreign subsidies that could distort the EU internal market, particularly in terms of bidding, pricing and contractual conditions, which would give other EU market participants an unmatched advantage.

This is not the first time Temu has had friction with European regulatory authorities. The European Commission launched an investigation into Temu under the Digital Services Act last year and preliminarily concluded in July that the platform had not taken sufficient measures to prevent illegal sales of goods$拼多多(PDD)$