On September 1, 2026, one of the most famous companies in China’s new e-commerce sector finally went public. Shein held its IPO in Hong Kong, raising approximately $1.7 billion. However, the celebration for investors was short-lived: within the first few hours of trading, the company’s shares were already down about 10% from the offering price. By the end of the trading session, the decline had slowed, but the debut was still lackluster.
The valuation of the business itself was particularly telling. In 2022, Shein was valued at nearly $100 billion. At the time of its listing on the Hong Kong Stock Exchange, it was valued at approximately $26–27 billion. In other words, over four years, the company lost nearly three-quarters of its former valuation.
And it would have been hard to pick a more symbolic day for the IPO.
It was on September 1 that France began imposing a special environmental “tax” on so-called “ultra-fast fashion” goods—a category of which Shein has become a symbol. The surcharge can be up to 50% of the item’s price, but no more than €12 in 2026. By 2030, the maximum amount is set to rise to €19.50.
UA.News explains how Shein, Temu, and AliExpress built a global empire of goods priced at just a few dollars, why their products are so cheap, how algorithms keep users coming back for more, and why countries are one by one beginning to dismantle this business model.
Shein, Temu, and AliExpress: How China Created a Global Supermarket of Cheap Goods
AliExpress was launched back in 2010 as part of the Alibaba Group. Its model was quite straightforward: thousands of Chinese sellers were given the opportunity to sell goods directly to buyers in Europe, the U.S., and dozens of other countries.
In effect, AliExpress removed some of the middlemen from the traditional supply chain. In the classic model, goods follow a path something like this: factory — large wholesaler — importer — national distributor — store — customer. Each participant adds their own markup.
On the marketplace, a Chinese factory or seller can ship a phone case, a cable, or a T-shirt directly to a person in Kyiv, Paris, or Warsaw. Later, Alibaba began to shorten this chain even further. For example, the AliExpress Choice service means that the platform takes on a significant portion of the work related to pricing, customer acquisition, delivery, and after-sales service, while sourcing products directly from manufacturers and sellers.
Shein went even further. The company transformed fast fashion into something akin to a technology platform. Instead of large seasonal collections, it can continuously test a vast number of new styles.
And then came Temu—a marketplace operated by PDD Holdings—which applied that same logic to virtually all product categories: from kitchenware and tools to toys, electronics, home decor, and clothing.
As a result, several different business models have emerged within a single market. AliExpress is a massive international marketplace. Shein is a technological machine for producing and selling ultra-cheap fashion. Temu is a one-stop shop that has turned the hunt for discounts into almost a game.
And the competition between them has only pushed prices down even further.
Why products on Shein, Temu, and AliExpress can cost just a few dollars
There’s no single secret behind the low prices on Chinese marketplaces. Their advantage stems from several factors at once.
First is the scale of Chinese manufacturing. Over the years, entire clusters of businesses have formed around major industrial centers. One factory produces fabric, another makes hardware, a third handles packaging, and a fourth does the sewing.
Manufacturers don’t have to build the entire system from scratch.
The second factor is the shortest possible route to the customer. A $5 item becomes significantly more expensive if it first has to be shipped by container to Europe, cleared through customs, delivered to a warehouse, distributed among stores, and then the retailer has to pay for retail space rent, sales staff salaries, and still leave a margin for the importer.
Shein or a seller on AliExpress can simply ship it directly to the customer.
But Shein’s model is the most interesting.
The company itself explains that a new design may initially be produced in a batch of only about 100–200 units. If the item sells well, the system orders additional production. If not, the company isn’t left with a huge warehouse full of clothing that nobody wants.
A traditional retailer is forced to guess what will be popular several months down the line. Shein tries to test demand first and then scale up production.
This allows them to release a huge number of styles at once and quickly phase out the ones that don’t sell.
That’s exactly why Chinese platforms are becoming less and less like traditional stores. They’re more like massive data-processing systems connected to thousands of manufacturers.
From a Chinese factory straight to your apartment: how the logistics of cheap packages work
Another important part of this revolution is the postal system. For many years, the U.S. and Europe had rules under which small international packages received significant customs benefits.
For Shein, Temu, and AliExpress sellers, this was an almost ideal environment.
Instead of importing a container with 10,000 T-shirts into the country as a regular importer, a company could send 10,000 individual orders directly to consumers.
The scale of this flow became enormous. According to the European Commission, in 2024, approximately 4.6 billion items valued at up to €150 were imported into the EU. That’s about 12 million per day.
And in 2025, that number had already reached nearly 5.9 billion. Moreover, in 2024, 91% of these shipments originated from China.
In other words, this is no longer just a small niche in e-commerce. We’re talking about billions of individual items that physically pass through airports, sorting centers, and customs facilities every year.
Some of the platform’s popular items are now stored closer to customers—in local warehouses. But the very ability to ship huge numbers of small packages from China at low cost has become one of the cornerstones of the business model.
And it is precisely this foundation that the government has now begun to dismantle.
A store that’s hard to leave: how Temu and Shein’s algorithms make you buy more
However, cheap products are only half the business. The other half is getting people to buy things they didn’t even intend to buy in the first place.
When opening Temu, users often see not a typical catalog, but an endless stream of sales, countdowns, coupons, gifts, bonuses, wheels of fortune, and notifications that an offer is about to expire.
Shein actively uses personalized recommendations, constantly updates its product lineup, and lowers the psychological barrier to purchasing.
A person might hesitate over a $40 T-shirt. A $4 T-shirt—just add it to the cart. And if there are earrings for $1.90, a phone case for $2, and some kind of organizer for $3 right next to it, the cost of a single impulse purchase seems so small that the rational barrier practically disappears.
At the same time, the algorithms are constantly learning. As a result, the feed becomes increasingly tailored to the specific user. European regulators have already noted that this goes far beyond ordinary advertising.
The European Consumer Protection Network has accused Temu, among other things, of offering fake discounts, creating an artificial sense of scarcity, using false promotion deadlines, and employing coercive gamification.
For example, a user might be offered the chance to spin a “wheel of fortune” to receive a bonus, though the actual terms of the offer are not always immediately clear.
In May 2026, the European Commission fined Temu €200 million under the Digital Services Act for failing to adequately assess the risks of illegal goods being sold on the platform.
Thus, the debate surrounding Chinese marketplaces is gradually shifting from the question “Why are things so cheap there?” to another: “Should platforms even be allowed to sell so many goods in this way?”
The U.S. and the EU Are Closing Customs Loopholes for Shein and Temu
The U.S. dealt the first major blow. For many years, the American “de minimis” rule allowed goods valued at up to $800 to be imported without standard customs clearance and without paying a portion of the duties.
An investigation by a U.S. House of Representatives committee clearly demonstrated the extent to which Chinese e-commerce relied on this rule: according to its estimates, Shein and Temu alone accounted for more than 30% of all de minimis shipments entering the U.S. daily.
In May 2025, the U.S. abolished the duty-free regime for such low-cost packages from China and Hong Kong. Subsequently, the Donald Trump administration extended the suspension of the de minimis rule to other countries. In 2026, the White House confirmed the continuation of this policy.
The European Union is following the same path. As of July 1, 2026, a temporary duty of €3 per product category per shipment has been imposed on low-value goods costing up to €150. And the exemption itself—which allowed goods costing less than €150 to be imported without paying the standard import duty—is being eliminated as part of a major EU customs reform.
The reason isn’t just about money. European authorities cite dangerous or uncertified goods, undervaluation of customs value, environmental impacts, and unfair competition with local stores.
And now, in addition to pan-European measures, individual countries are introducing their own. France has become the most striking example.
As of September 1, it has effectively made some of the ultra-cheap clothing from Shein and similar platforms artificially more expensive through an environmental surcharge. The next phase will be even stricter: French law also provides for a ban on advertising ultra-fast fashion, and starting January 1, 2027, restrictions on its promotion by influencers.
Ukraine is also preparing to tax cheap purchases from AliExpress and Temu
For now, Ukraine remains a significantly more convenient market for cheap international packages.
Under current rules, goods in international postal and express shipments with a total value of up to €150 are not subject to customs duties. If the value exceeds €150, import duties and VAT are levied on the amount exceeding that threshold. But changes to this system are already in the works.
In August 2026, a relevant committee of the Verkhovna Rada recommended that parliament support a package of bills that would effectively eliminate the VAT exemption for commercial international purchases valued at up to €150.
The idea is that 20% VAT will be automatically added at the time of payment on the marketplace. This means the buyer won’t have to go to customs or fill out a declaration themselves. The tax will be administered by the e-commerce platforms themselves.
For example, a hypothetical item from AliExpress costing 1,000 hryvnias will cost the buyer approximately 1,200 hryvnias at the order placement stage once the system is implemented. At the same time, gifts and other non-commercial shipments between individuals valued at up to €45 are expected to remain VAT-exempt.
The new rules may take effect no earlier than January 1, 2027, and only after the government confirms that the customs IT system and marketplaces are ready. The Ministry of Finance estimates the potential additional revenue from the reform at approximately 10 billion hryvnias per year.
The rationale is virtually the same as in the EU: a Ukrainian retailer that officially imports a shipment of goods pays VAT, customs duties, salaries, rent, and other expenses. A Chinese seller who sends the same goods to a buyer in a single package can currently avoid a significant portion of this financial burden.
Does this mean the end of the era of items costing just a few dollars?
Shein, Temu, and AliExpress aren’t going anywhere. They’re backed by massive manufacturing capacity, millions of customers, and advanced logistics and technology—areas where traditional retail will have to play catch-up for many years to come.
But one of the main advantages of this model is gradually fading.
For years, Chinese e-commerce has benefited from a peculiar economic situation: a $5 T-shirt could be manufactured in China, individually packaged, flown halfway around the world, cleared through customs, and delivered to a person’s home—and it could still cost less than a T-shirt in the store across the street.
Now, governments are trying to factor into its actual price what was previously left out: VAT, customs duties, safety inspections, waste processing, and environmental costs. That’s exactly why Shein’s stock drop on its first day of trading seems symbolic.
The problem for the company isn’t just a failed stock market debut. Part of the mechanism that allowed Shein to grow from a Chinese online store into one of the world’s largest fashion retailers is now in question.
The U.S. has eliminated the “de minimis” rule. The European Union has imposed tariffs on cheap packages. France has begun penalizing “ultra-fast fashion” with a separate environmental levy. Ukraine is preparing to levy VAT on foreign online purchases effectively starting from the first euro.
Goods from China are unlikely to stop being cheap. But the era when the government barely noticed billions of small packages containing items priced at $2, $5, or $10 seems to be truly coming to an end.
