Pinduoduo's Strategic Maneuvers Amidst Fierce E-commerce Competition
PDD Holdings, the operator of Pinduoduo and Temu, reports beating market revenue estimates despite falling net profits due to increased competition and investment needs. Efforts to boost domestic consumption in China, coupled with pressures like U.S. tariffs, have affected margins and stirred a price war in the e-commerce sector.
PDD Holdings, the parent company of low-cost platforms Pinduoduo and Temu, reported stronger-than-expected quarterly revenue on Monday, although net profit declined due to hefty investments amid rising competition.
The Chinese government is working to revitalize domestic consumption under an economy facing challenges, including a sluggish property market and impacts from former U.S. President Donald Trump's trade policies. E-commerce players, such as Pinduoduo, JD.com and Alibaba, have turned to significant discounting to attract consumers, igniting a price war in the process.
Zhao Jiazhen, PDD's co-chief executive, acknowledged that intensified industry competition has resulted in slower revenue growth and lower operating profit for the second quarter. As Temu targets U.S. consumers and seeks to tap local sellers, it contends with giants like Amazon, which wields its scale for favorable operations. Despite increased spending, Pinduoduo's revenue rose 7% compared to the previous year, but operating profits saw a notable decline.
(With inputs from agencies.)
Google News