EU and China competition shifts from factories to regulation

The European Commission recently fined online marketplace Temu €200 million under the Digital Services Act (DSA), finding that the platform had not adequately assessed risks related to illegal and potentially dangerous products. Shortly after, the Commission launched its first in-depth investigation into Chinese e-commerce firm JD.com under the Foreign Subsidies Regulation (FSR). The probe concerns JD.com's planned acquisition of German electronics retailer CECONOMY (owner of MediaMarkt and Saturn), assessing whether JD.com gained unfair advantages from Chinese state support.

These cases reflect a broader trend: EU-China competition is increasingly about regulation, technology, and data rather than just tariffs. Chinese EV makers face additional duties of up to 45.3%, while strategic sectors like renewable energy, batteries, medical technology, critical infrastructure, and digital platforms face growing regulatory scrutiny.

Europe now uses tools such as foreign investment screening, the Foreign Subsidies Regulation, the AI Act, the Digital Services Act, and the NIS2 Cybersecurity Directive. Access to the EU market depends not only on product competitiveness but also on a company's ability to meet safety, data governance, and competition rules.

Experts call this the "Brussels Effect" – the EU, due to its market size (450 million consumers), can export its rules beyond its borders. In the next phase of globalization, companies will need more than a competitive product; they must navigate regulation and demonstrate compliance.