The Evil Company That Took Over The USA

if you've been on the internet recently you've probably seen an ad like this or this or this this is Teemu the new Chinese e-commerce company that's taken over the world despite just launching it in 2022 Teemu has since spread to over 50 countries it was the most downloaded app in the US in 2023 reaching over 50 million monthly users it is the second most visited Commerce website on Earth and in January 2024 sales were up over 800% you might have heard about it from the literal billions they've spent on ads across Google Facebook Instagram Tik

Tok or those famous ones from the Super Bowl or you've heard of them through word of mouth that's because everything on Teemu is just so cheap I'm talking about shoes for $20 an Apple Watch for 20 and a shyy for less than five what timu is the child of pindu Duo the original Chinese e-commerce company who specialized in bulk purchasing agricultural Goods with your friends and strangers pin Doo Duo now PDD blew up during the covid lockdowns mainly in smaller Chinese cities hit hardest by losing access to stable Supply chains teaming up with strangers helped

keep them running smoothly and farmers in business teu though built for Western audiences and regulations doesn't use the bulk purchasing model like PDD does but they do copy one thing shopping with Teemu is like playing a slot machine one 2 3 4 roulette wheels are spun for deals on your shopping carts timers tick down as the site pushes you to make a quick decision purchases can be split into four separate ones down the line no matter how cheap the item is and you feed Virtual Fish to get credit for more purchases using Teemu is like

shopping at a mix between the thrift store and a casino and it works in 2023 sales topped over5 billion in America traffic was up almost 85% on Black Friday earnings almost tripled in a year and PDD became the largest Chinese Commerce Company by market cap leting out longtime giant Alibaba this is all a little odd PDD Holdings is not a very transparent company for a company of their value they employ a remarkably little amount of people around 13,000 they have little hard assets little disclosure on their payouts and quite opaque financial statements not to mention

the challenge of actually distinguishing between teemu's and pindu Duo's value in their little amount of data that's released so if you don't really know where your money is going when it's plopped into Teemu why are so many Americans investing in it it's because this website is not your typical drop shipper or retailer of course like the average one Teemu handles all the marketing stuff on their end suppliers are generally good at making their products but less so at getting them out into the world but unlike a typical supply chain that might go factory warehouse storefront

purchase Teemu Cuts these middle ones out and sells them directly from the factory one benefit of this is that with over 100,000 suppliers in the country with by far the largest manufacturing base on Earth Teemu can flood their website with products ranging from cat toys to drill bits to anything you can think of why Teemu does this and what investors really love about the service is is that they provide a solution to the manufacturer's puzzle the need to constantly predict market demand a manufacturer wants to make as many little trinkets as people will buy no

more no less if they make too many they'll need to store them for a hefty cost and if they make too little they're not making as much money as they could be making which in the world of business is the cardinal sin instead of constantly trying to predict Demand with with models and statistics wouldn't it be so much easier if they could just know how many products people will buy Teemu think so too think about it from the perspective of selling toys Christmas season is coming up and the toy manufacturer has eight designs you can

choose between a company like toys are a company like Amazon has to predict which ones are going to sell well and roughly how many people are willing to buy if they do this beforehand they can minimize the amount of time the toys are sitting on their shelves or in their warehouses getting the toy to the buyer as quickly as possible but teu flips this on its head because they cut out the middleman that toy manufacturer with eight different products can put them all up on the website and literally see which ones sell better than others

they can cut out all those costs of storing them handling them and the retailers is marketing of them the catch is because they're not buying them in advance it takes a long time for a Teemu package to arrive at your door because it takes time to produce these toys and deliver them from scratch Teemu takes as many as 15 business days to arrive at your door compared to Amazon's 2 it takes longer for the buyer but this way every product is its own little market survey that's why Teemu has so many weird products and plastic

dud ads the bizares is part of their their strategy put everything up on their website and then see which little trinkets stick and which ones they can scrap she in another Chinese e-commerce site which specializes in fast fashion uses a similar strategy I did some shopping around here but this website it wasn't for me I won't lie though it has an appeal to it all these clothes are just so cheap by working with over 6,000 textile fact factories across China and also employing a similar stick everything on the app and see what people buy model

in 2021 Sheen was able to add 20 times more new items to their service than H&M and Zara combined oh and it also outsold these two as well Shen makes up only a fifth of all e-commerce sales from China but the versatility of Tex sters could be why over half the total sales are fashion related this model just works best with easily variable items the problem with this waiting game is that the products are usually of such low quality Teemu customers get frustrated and shift back to the big players often times products are not what's

described other times it's a cheap knockoff of an established brand that would probably lose you credibility if you wore them outside or sometimes they're too unsafe to use I personally wouldn't recommend getting a toaster on there Goldman Sachs has estimated that the retention of Teemu the number of customers who will come back to purchase another orange package is only around 30% Amazon Prime has a retention rate around 90% this Ultra cheap test and repeat advertised everywhere model may work to reel people into the service but it doesn't seem to get them to stick around Savvy

business practices may not be the only reason teu has performed so well but before we talk about the other theory of their growth I want to thank grammarly for sponsoring this video do you know what I hate writing emails it's just a slog to get through but by using grammarly I have an AI writing partner in the room with me at all times you can tell gramarly to create writing that's witty or direct or casual or formal for all sorts of situations the best part is that all of these AI features are free to use

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communicating often in written reports and emails by upgrading to grammarly premium just think of all the time you can save to improve your productivity you can visit the link in the description or pinned comment to sign up today so big thank you to grammarly and now let's ask how did teu grow so fast another more controversial reason is is often blamed for this explosion of cheap Chinese Goods into the West import laws specifically the Dom Minimus thresholds if a parcel coming into the country is below this certain value then you don't have to declare it

it doesn't have to be taxed and it doesn't have to be regulated the idea behind this is that it's not worth a country's administrative capacity to go through every tiny little package when they could spend their time looking for drugs and enforcing teror on the larger easier to handle containers the specific value this is varies by country in Canada the threshold is $ 20 Canadian dollar in the EU €50 in the UK 135 quid in Japan it's 10,000 yen in China 50 Yuan many countries have a threshold of zero and in America the world's largest

consumer Market it's $800 that is very high globally and it was actually increased from $200 in 2016 to reduce costs to businesses and increase trade the national foreign trade Council a trade Association that includes companies like Amazon eBay and FedEx was certainly happy to increase the amount of packages coming into the us but so were their opponents if you look at teemu's prices a package with them would almost definitely fall under $800 pretty much no matter what you buy and because it's shipped directly from the manufacturer not through a wholesaler who tries to move things

in bulk Teemu orders almost always fall under Dom Minimus in the US since the online shopping boom of the pandemic and the highest inflation in a generation Dom Minimus Imports have boomed in America to around 2 million a day 600,000 of these are estimated to be from timu and shien alone 600,000 a day assuming that's roughly 9,000 tons of knicknacks that translates to around 90 Boeing 777s coming into the US full of Teemu and Sheen orders daily these are individual unlabeled packages coming in making it very hard to enforce any sort of rules regulations or

keep data on them contrary to the trend of slowing Chinese exports growing only 0.6% in 2023 direct to Consumer e-commerce exports grew by 69% 230 times the average and America received over a third of these Ecommerce exports besides a system where counterfeits unsafe products and chemicals used to make hard drugs can slip into the US three Ripple effects of this boom are one through the chemicals needed to make these plastic Trinkets and cheap clothes it's kept oil demand higher than ever China has been consolidating the factories to make these so-called petrochemicals going from a shortage

to a huge surplus of chemicals like polyester and pelene China who already produces around 75% of the world's polyester has grown output by enough in the past few years to make an additional 100 billion t-shirts annually in fact the International Energy agency has estimated that Global oil demand excluding petrochemical demand would be lower today than in 2019 moving chemical production from Europe and Japan to China is keeping oil fuming and its prices High the second issue uh it perpetuates slavery there are almost 2 million Wagers in the shin inang region of China who live in

internment camps these are prison camps for the Muslim population to be re-educated into Chinese Society prisoners suffer horrible abuses torture and are put to work in the name of curbing terrorism and religious extremism many countries have officially declared the system a genocide and the United States has pass legislation to block All Imports which use this weager labor from entering the country timu officially disagrees with these allegations saying its low prices are due to its streamlined supply chain but an independent audit from Ultra Information Solutions seems to have found at least 10 products linked to this

slave labor if the Department of Homeland Security cannot verify the origin of the goods through the dominous loophole then it would not stop products that were made at the hands of slaves from being bored entry into the us and third it's not fair old Joe loves to talk about Fair competition with China but the Dom Minimus law creates an inbalance of costs between direct to Consumer Chinese suppliers and larger firms who ship in the traditional way in 2022 Gap paid around $700 million in tariffs H&M paid 200 million and across the us over 111 billion

was collected timu and Shen on the other hand haven't paid a single dime technically this is not illegal Teemu is just playing by the US's own rules but it puts American companies at a huge disadvantage over cheap Chinese sellers on their own home turf not fair if you ask most and this is a reason why there is a movement to get the Dom Minimus threshold the minimize back in 2023 a bill was introduced to the US Senate to reduce the threshold for non-market economies from $800 all the way down to $7 proponents argue these government

lead economies are the ones to unfairly subsidize their exports bringing their price down below the limit to sneak products into the us but of course this bill is mainly aimed at China and their glut of small and medium-sized Manu factories in the growing trade war between the two superpowers in 2024 a law was passed which required B dance to either sell Tik Tok to an American owner or have it banned from the country the same bill allows the president to determine any other foreign adversary controlled application to have a similar divest or ban ultimatum the

American government is in the mood to drisk their economic ties with China that that means doing more to protect American brands's intellectual property or blocking the import of drugs from China in June 2023 the select committee on the Chinese Communist Party released a report on teu saying it does next to nothing to keep its Supply chains free from slave labor with no internal audits on its suppliers in April 2024 Senator Tom Cotton wrote a letter to President Joe asking the government to officially investigate team and ended off with a simple question if you had the

authority would you ban it maybe Teemu does not need to be banned it might die off on its own American consumers a don't like to wait 3 weeks for their deliveries to come and B are getting fed up with teemu's quality eBay probably the most similar American equivalent to Teemu has claimed they faced no additional pressure due to their competitors rapid entry into their space teu may just be blowing money giving out free cash and deals to Consumers who will only click on the site once get their one package and switch back to Amazon promptly

after investors may still love teu now but look back and you'll see many once Chinese Superstars have fizzled out over time wish.com had a similar service to Teemu in fact pretty much identical but after being the butt of too many wish version jokes the company lost over 99% of its value from its peak in 2021 all these viral Teemu hall videos are an echo of those same videos for wish products consumers are curious about the randomness of the purchases but would never seriously substitute their quality for that there will probably come a time when teu

succumbs to either political or consumer pressure but as for the Chinese e-commerce space as a whole the incentives are too strong to kill it outright If teu eventually dies we will probably just see another rise from its ashes one of the only types of products in the US exempt from the dominous threshold are agricultural Goods if you want to know why food seems to face far more protection than any other industry then why not check out this joint I made on thanks