Chinese State-Backed E-Commerce Platforms Rapidly Gaining Market Share; New Report Calls for Policies to Bolster U.S. Tech Leadership, Protect Consumers

WASHINGTON—Chinese e-commerce platforms like SHEIN and Temu are rapidly capturing market share from U.S. e-commerce leaders, driven by a state-backed strategy to expand China’s global influence, financial footprint, and ability to compete in artificial intelligence, according to a new report from the Information Technology and Innovation Foundation (ITIF), the leading think tank for science and technology policy.

China provides its e-commerce platforms with generous subsidies, logistical support, and favorable regulations, enabling them to scale quickly, expand internationally, and offer lower prices that pressure U.S. competitors—underscoring the need for a U.S. policy response. Chinese platforms also exploit loopholes in U.S. import regulations and have a track record of exposing consumers to product safety hazards, data security threats, counterfeits, and other potential harms.

“Chinese e-commerce platforms are growing rapidly and are increasingly popular with U.S. consumers. They are innovative and adaptive, but their rise is not just the result of market forces—it’s also deeply intertwined with state-backed industrial policy,” said ITIF Policy Analyst Eli Clemens. “This creates two major risks: It puts U.S. e-commerce companies at a competitive disadvantage, and it exposes U.S. consumers to potential harm.”

ITIF’s report details how platforms like Temu benefit from subsidies, talent recruitment and development programs, and state-owned transportation and logistics infrastructure to reduce costs, while AliExpress gains from state-backed industrial parks and tax incentives. SHEIN receives significant support through financial exemptions, expedited approvals, and logistics advantages. Meanwhile, all three have sold counterfeit goods, committed labor violations, and raised data security concerns, leading to investigations and increased regulatory scrutiny worldwide.

China’s support for its e-commerce platforms is part of a broader strategy to make e-commerce a key driver of its national power by 2035. For example, China increasingly integrates e-commerce infrastructure with its broader military logistics strategy.

To protect U.S. consumers and businesses from unfair practices while strengthening the U.S. e-commerce sector, ITIF offers a number of recommendations for U.S. policymakers:

• Address the de minimis loophole: Limit Chinese e-commerce platforms’ exploitation of duty-free imports by creating a trusted shipper program and tightening oversight to curb unfair competition.
• Enhance customs enforcement with AI: Equip CBP with AI-driven screening solutions to manage increased workloads, detect illicit goods, and improve import monitoring.
• Enforce reciprocal market access: Require foreign countries to grant U.S. e-commerce companies the same market access their platforms enjoy in the United States.
• Leverage China’s e-commerce industrial policy for U.S. firms: Help U.S. e-commerce platforms access benefits from China’s industrial policies.
• Support U.S. e-commerce infrastructure investments: Use tax incentives and economic levers to promote automation, robotics, and logistics investments in the U.S. e-commerce sector.

“The future of e-commerce is not just about consumer choice, but also about global power dynamics,” said Clemens. “China’s strategic use of e-commerce platforms as tools for economic and geopolitical dominance has created a high-stakes race. If policymakers fail to address the advantages leveraged by Chinese state-backed platforms, they risk not only compromising the competitiveness of U.S. businesses but also ceding influence over critical data assets to America’s strategic competitor.”

Contact: Nicole Hinojosa, [email protected]