PDD Holdings, the Chinese e-commerce operator behind Pinduoduo and Temu, has shaken up the e-commerce space in China and the United States. And the company's generous earnings will give existing players even more reason to take note.
PDD reported quarterly revenue that more than doubled from the same period last year. Revenue for the quarter ended December 31, 2023 reached 88.8 billion yuan ($12.3 billion), an increase of 123% from the same quarter in 2022. Quarterly net profit was 22.4 billion yuan ($3.1 billion), an increase of 146% year-on-year. one year ago.
E-commerce platforms performed similarly well on a full-year basis. Total revenue in 2023 increased to 247.6 billion yuan ($34.4 billion), an increase of 90% from the previous year. Net profit rose 93% to 58.7 billion yuan ($8.2 billion).
Lai Chen, co-CEO of PDD Holdings, said in an earnings call that Pinduoduo has withstood China's economic downturn, captured a larger share of the country's e-commerce market, and secured budget. He said 2023 will be a “pivotal chapter in our company's history.”Platform Temu’s popularity soars in the US
As China's economy experiences a crisis of confidence, Pinduoduo's inexpensive products are gaining favor with value-conscious consumers.
Temu launched in the US in September 2022 and has since expanded to Europe and Southeast Asia. Knockdown prices that allow you to “shop like a millionaire” are helping the platform challenge established players such as his Amazon, Walmart, and Target. Temu has also spent heavily on advertising to promote its brand on platforms such as Google, Meta, and the Super Bowl.
PDD's U.S. push could be costly: Analysts say Temu is spending cash to enter the U.S. e-commerce market. PDD does not distinguish between its Chinese and international operations in terms of revenue.
But Mr. Tem's tactics have drawn the attention of U.S. lawmakers, who say there is a “very high risk” that products on the platform are made with forced labor. Tem's cheaper products also led lawmakers to call on the Biden administration to crack down on the number of packages entering the country duty-free from China. U.S. trade law allows consumer packages to be imported duty-free. The current standard is $800 per person per day.
PDD is also a concern for Chinese tech executives. Last November, Alibaba founder Jack Ma urged employees to “correct” the company's trajectory and praised PDD's ability to gain market share. JD.com's Richard Liu also recently urged workers not to “lay down” amid increased competition.
