Cross-border e-commerce ignites a "new battle"
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Author | Huang Yu
Editor | Zhou Zhiyu
If we were to choose a keyword for the past year in the cross-border e-commerce industry, "Tribulation" may be the most fitting.
Repeated tariff policies, continued tightening of overseas regulations, and the accelerated penetration of generative AI—these three forces have intertwined, almost simultaneously reshaping the industry's underlying operating logic. Cross-border e-commerce platforms that once relied on low prices, direct mail small parcels, and traffic dividends for rapid expansion were forced to hit the brakes and re-examine the sustainability of their business models.
This track, once seen as an easy way to make money, has entered a phase of fierce competition. The story for cross-border e-commerce platforms is shifting from “efficiency” to “compliance,” “localization,” and “branding.”
As one of the "Four Little Dragons" of Chinese cross-border e-commerce (TEMU, SHEIN, AliExpress, TikTok Shop), AliExpress now regards "branding overseas" as its most important strategy. After openly challenging Amazon last year, AliExpress has recently launched its first large-scale brand merchant recruitment event of the new year, explicitly setting "brand globalization + overseas hosting" as its core keywords for 2026.
Over the past year, the Four Little Dragons of Chinese cross-border e-commerce have almost simultaneously entered a strategic adjustment period. From the “full hosting myth” to the return of “semi-hosting,” from price wars to value wars, the industry is collectively passing through its tribulation. This reshuffling determines not only which platforms survive, but also the future ways for Chinese manufacturing and brands to go global.
Focus on the “Value War”
As the old guard among cross-border e-commerce platforms, AliExpress kept a low profile during the sector’s explosive growth in recent years. But last year, AliExpress made a high-profile move, upgrading its branding strategy from the "billions subsidy brand globalization" to the "Super Brand Globalization Plan," while directly launching a frontal challenge to Amazon.
AliExpress’s “Super Brand Globalization Plan” specifically states: "Allow merchants to achieve higher sales in key markets at half the cost compared to Amazon."
AliExpress shows no sign of slowing down on this path. According to Wallstreetcn, after its first recruitment event on January 7, AliExpress will hold a new merchant recruitment conference in Shenzhen on January 22, focusing on merchants with strong branding or deep localization capabilities.
TEMU, under Pinduoduo, also emphasized the importance of brand globalization toward the end of last year. Pinduoduo’s Co-Chairman and Co-CEO Zhao Jiazheng stated that, in the next phase, TEMU will go all-in on the high quality and branding of the Chinese supply chain to revamp the platform.
Looking back over the past year, the most notable change among cross-border e-commerce platforms was the collective "correction" of their existing models.
Wallstreetcn understands that, in response to policy risks and to bolster risk resistance, China’s four major cross-border e-commerce platforms have taken measures such as diversifying operating regions, improving operating strategies, advancing semi-hosting models, and increasing overseas warehouse fulfillment.
The cancellation of the small parcel tax exemption in the US and other places last year undeniably dealt a blow to cross-border e-commerce platforms. The small parcel tax exemption had been a catalyst for the rapid expansion of cross-border e-commerce. Platforms relying on the direct mail small parcel model, like TEMU and SHEIN, experienced a golden age of expansion in the US.
Data shows that from 2015-2024, applications for "small exemption" items in the US surged from 139 million to 1.4 billion.
However, since 2024, countries including the US, EU, UK, Japan, Vietnam, and Brazil have already or are proposing to eliminate small parcel tax exemptions.
Direct mail small parcels are usually associated with the full hosting model. TEMU, seen as a “dark horse” in the cross-border sector, became a gold mine for new and old Chinese cross-border players. Its “full hosting model” swept through the market like a hurricane, becoming the hottest topic of 2023. Following TEMU’s lead, AliExpress, SHEIN, and TikTok Shop all quickly adopted full hosting models.
Now, facing tariff and compliance challenges, the full hosting model—once considered the tool for efficiency and scale—has become marginalized in platform strategies. AliExpress, TEMU, SHEIN, etc. have shifted their recruitment focus toward semi-hosting or overseas hosting models.
Reportedly, after first launching the semi-hosting model offering logistics and warehousing services in 2024, AliExpress quickly intensified its “overseas hosting” model. In this model, merchants only need to connect their overseas warehouse products; the platform handles marketing, user operations, and local fulfillment, seen as an important model for local operational hosting.
With changes in the external environment, localization has become the key to global e-commerce competition. Consequently, AliExpress formally listed “overseas hosting” as one of the core keys to merchants going global last year, with another being “brand globalization.”
Currently, AliExpress’s overseas hosting covers more than 30 key global markets including Europe, North America, Asia-Pacific, and Latin America. Starting January 2026, AliExpress will upgrade overseas hosting, dividing Europe into three major operating regions to further improve localization services. In addition, AliExpress will expand its official logistics warehouse and distribution capabilities in Europe to strengthen the “fulfillment certainty” user experience.
Industry Structure Reshaping
To focus on “localization,” in addition to ramping up the operation model of merchants stocking local overseas warehouses, these cross-border platforms have also intensified their recruitment of overseas local merchants, which will further impact giants like Amazon.
According to Wallstreetcn, last year AliExpress vigorously recruited local merchants in markets like the US, Germany, and Poland, while TEMU's “Local Seller Program” has gone live in numerous countries including the US, Mexico, UK, Germany, France, Italy, Netherlands, Spain, and Japan.
Notably, in November last year, TEMU in Europe signed numerous memorandums of cooperation with postal groups in France, Italy, Austria, among other countries. This is seen as a key move in TEMU’s intensification of local building efforts.
Analysts from CICC point out, if an e-commerce platform wants to become a leading local player, localization is a must. Against this backdrop, the leading cross-border e-commerce platforms are all systematically advancing localization.
Based on their active strategy adjustments and the growth potential of global e-commerce, despite headwinds from tariff and regulatory policies, the leading cross-border platforms continue to show growth resilience.
According to CICC research, in 2025, China’s outbound e-commerce GMV is expected to grow by 12% year-on-year, above the 11% growth rate of China’s domestic e-commerce GMV, and ahead of the global e-commerce GMV growth rate of about 8%. The main drivers are the Four Little Dragons, which are expected to maintain a 25% GMV growth rate in 2025—higher than the overall sector.
TEMU also demonstrated that last year’s “black swan” events did not impede its global expansion. At Pinduoduo’s year-end shareholder meeting, management revealed that TEMU took just three years to cover the development distance that Pinduoduo's domestic site accomplished in about ten years, meaning TEMU's scale now rivals the domestic platform.
Analysts at First Shanghai Securities also note that TEMU’s third-quarter 2025 showed a positive growth trend. Building on the strong results of the second quarter, quarterly GMV growth turned positive in Q3, with revenues entering a healthy upward track and losses expected to shrink at an accelerating rate.
AliExpress’s brand strategy upgrade last year also marked a key turning point in its push for “brand globalization.” Over the past year, AliExpress has become the new main venue for brands going global: during overseas “Double 11” and Black Friday in 2025, more than 300 brands achieved daily sales on AliExpress twice as high as Amazon, while the number of brands with total sales exceeding one million dollars increased by 80% year-on-year.
According to Sensor Tower data, during “Black Friday” in 2025, AliExpress downloads in Europe surpassed Amazon for a time.
However, despite AliExpress’s “high-profile, high-impact” approach over the past year, TikTok Shop seems to have posted more outstanding GMV growth among the Four Little Dragons.
According to Wallstreetcn, ByteDance recently disclosed that in 2025, TikTok Shop’s GMV reached nearly a hundred billion dollars, second only to Amazon, Walmart, Shopee, and eBay, ranking fifth among mainstream overseas e-commerce platforms and first in growth rate.
With changes in global trade dynamics, a consensus has emerged: cross-border e-commerce must shift from growth at any cost to focusing on profitable growth, from simple “low-cost exports” to high value-added branding strategies.
In this context, the globalization wave is moving from the “selling goods era” to the “brand era.”
Looking ahead, cross-border e-commerce remains in a huge but more complex market. The challenges lie in rising policy uncertainty, compliance costs, and localization investment; while the opportunity is that global consumers’ demand for high value and diverse supply hasn’t disappeared, but their definition of “cheap” is evolving.
In this sense, 2025 may not be the most boisterous year for cross-border e-commerce, but it is likely to be the year that determines the industry’s long-term pattern. After weathering its “tribulation year,” China’s cross-border e-commerce is shifting from a speed competition to a true endurance race.
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