Crisis Deepens: Chinese Products 'Killing' SMEs Now Unsold

The export engine of China’s low-cost e-commerce sector is weakening due to soaring jet fuel costs and declining demand from low-income consumers in Western countries. This situation is threatening the profitability of giant online shopping platforms such as Temu, Shein, and AliExpress.

Pressure on the cheap Chinese e-commerce business model has actually been mounting since last year after US President Donald Trump imposed new tariffs and removed duty-free concessions for low-value packages.

Now, conflict in the Middle East, including the war involving Iran, is worsening the situation by driving up global logistics costs. Express delivery companies like DHL Express have also begun applying higher fuel surcharges.

Data from the Trade and Transport Group shows Chinese low-cost e-commerce exports fell 10.9% year-on-year to USD 9.81 billion in April 2026. This figure marks the fifth consecutive annual decline.

Diana Qiao, a Shenzhen-based women’s clothing seller on Temu, admitted to raising the selling price of her products by USD 2 because the shipping cost per garment rose by an average of USD 1. “The burden is ultimately passed on to the consumer,” Qiao said. According to her, the price increase was necessary to maintain profit margins. Although sales have slightly declined, her company has not yet changed its shipping patterns.

Analysts assess that the export decline not only reflects the surge in logistics costs but also signals that the explosive growth period for low-cost e-commerce platforms is starting to end.

Temu and Shein are Chinese e-commerce platforms famous for offering products at very low prices. These products are shipped directly at retail from factories in China to consumers worldwide, exploiting duty-free loopholes for low-priced goods.

Frederic Horst, Managing Director of the Trade and Transport Group, said e-commerce companies are likely starting to send goods in bulk to overseas warehouses for subsequent local distribution. “That step makes sense when looking at air freight costs compared to the product’s value. If you buy a top weighing 300-400 grams, air freight costs can reach 60% of the total product cost,” he explained.

Meanwhile, Alibaba, as the owner of AliExpress, asserted that it remains focused on maintaining competitive prices for consumers while creating a stable business environment for sellers and buyers amid fluctuations in global transport costs.

Although export values are still higher than two years ago, future growth prospects are expected to be increasingly challenging. Besides continuously rising logistics costs, consumer purchasing power in the US and Europe is also eroded by inflation and rising energy prices.

Pressure on this sector is expected to mount further after the European Union plans to impose a fee of 3 euros for every low-value e-commerce package starting 1 July. Judah Levine, Head of Research at Freightos, estimates that air freight rates will remain high for a long time because jet fuel prices are still expensive. Even if the Iran conflict ends, a decline in logistics costs is not expected in the near future.

Martin Habisreitinger, Chief Operating Officer of Airfreight at Hellmann Worldwide Logistics, mentioned that companies could divert shipments to other modes of transport or postpone some shipments if logistics costs continue to rise.