How should a country respond when highly successful Chinese companies become too dominant within its borders? It’s a question more economies will have to confront as these firms fan out across the globe in search of new customers.
A decision by France to impose fees on ultra-fast fashion items starting this month is not the way to go. While there are legitimate reasons to curb the environmental costs of throwaway clothing, a measure crafted so narrowly that it effectively singles out Chinese companies like Shein Global Holdings Ltd., Temu, a unit of PDD Holdings Inc., and AliExpress, part of Alibaba Group Holding Ltd., is neither effective nor intellectually honest.
If the goal is to protect homegrown industries and jobs, the authorities should say so — and create policies that address those challenges directly. The issue isn’t confined to France. The recent meeting of G20 global financial leaders in the US ended without a joint statement after Beijing disagreed with criticism of its export-led industrial policy. China’s trade surplus hit a record high of $1.2 trillion last year and is on track to exceed that amount in 2026.
From Europe to Latin America, governments that want to build up domestic industries will need to find strategies to deal with formidable Chinese competition, even as they try to steer clear of a full-blown trade conflict.
The French legislation had an auspicious beginning. Decades-long concerns about the impact of fast fashion came to a head after Shein and Temu gained traction in Europe by taking the business model to new extremes in terms of speed and price. An early version of the law passed by the lower house of parliament in March 2024 was considerably broader and could have imposed penalties on established players such as Zara, owned by Inditex SA, and H&M of Hennes & Mauritz AB.
But as the legislative process continued, the target became increasingly specific. Strong lobbying by fast-fashion stalwarts shifted the focus toward targeting only Chinese online retailers, Pierre Condamine, a campaigner with Friends of the Earth France, told me. The version finalized in June defines ultra-fast fashion using criteria such as the number of new products a company offers and the cost of repairing items relative to their purchase price, characteristics that overwhelmingly apply to a handful of e-commerce platforms. The Stop Fast-Fashion coalition, which comprises a dozen groups, has criticized the law’s limited scope.
It doesn’t name China or any companies, which is probably a deliberate move to avoid accusations of discrimination or potential blowback from Beijing. But the distinction is largely moot. Even if the measure is framed as an environmental one, Chinese officials have already condemned it as discriminatory. It won’t be surprising if Beijing retaliates, given its usual responses to trade policies it considers unfair.
That doesn’t mean countries should refrain from protecting their industries. China’s trade gap with the rest of Asia is actually much bigger than with Europe or the US. Chinese companies’ need to escape intense domestic competition means that this phenomenon isn’t a passing fad. There are straightforward and honest ways of responding.
Thailand, which is grappling with an influx of cheap electric vehicles, announced a multi-tiered tax system last week that explicitly rewards companies for investing and manufacturing locally. Importers without domestic manufacturing in the country would face the highest tax rates, while carmakers that produce vehicles in Thailand using a high proportion of locally made parts would pay the lowest.
The objective isn’t being disguised as something else. Thailand wants to preserve its role as a regional auto-manufacturing center known as the “the Detroit of Asia,” encourage foreign carmakers to develop local supply chains and protect the jobs that come with the industry. There are parallels with Europe’s proposed Industrial Accelerator Act, which aims to boost the homegrown production of green technology, including EVs.
The rise of strong Chinese companies in almost every consumer sector will force more governments to decide how much domestic industry they’re willing to sacrifice for cheaper imports. There’s nothing at all wrong with protecting some productive capacity. But policymakers should be clear about those trade-offs and design policies to achieve the outcome they want.
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This column reflects the personal views of the author and does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Juliana Liu is a columnist for Bloomberg Opinion’s Asia team, covering corporate strategy and management in the region. She was previously CNN’s senior business editor for Asia, and a correspondent at BBC News and Reuters.
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