Weblog with daily updates of the news on a frugal, fair and beautiful China, from the perspective of internet entrepreneur, new media advisor and president of the China Speakers Bureau Fons Tuinstra
Pinduoduo (PDD) suffered an unprecedented 30% decline in its share value at the start of this week, but business analyst Shaun Rein sees here an opportunity for investors. Buy PDD, he tells them on CNBC. The company has hit a wall through China’s consumer decline in trust, but he sees enough possibilities to grow overseas, especially with Temu, he adds.
E-commerce expert Sharon Gai started her career at Alibaba and now explains to the rest of the world how consumer platforms in China work differently from the West, and why also newcomers like Shein and Temu work differently. A discussion on Retail TouchPoint.
Temu, owned by Pinduoduo, is one of the leaders in online retail that has been ruffling international competitors in the past year. Business analyst Shaun Rein looks for the BBC at the firm’s international expansion. “They’re proud that Chinese companies can slay the e-commerce dragons from the United States like Amazon,” he adds.
BBC:
Temu is owned by Chinese giant Pinduoduo – “a monster in Chinese e-commerce,” according to Shaun Rein, founder of the China Market Research Group.
“Throughout China, everyone buys products on Pinduoduo, from speakers to t-shirts or socks,” he says.
The company consistently trades places with rival Alibaba for the top spot of most valuable Chinese firm listed on a US stock exchange. Its current worth sits at just under $150bn (£117bn).
With the Chinese consumer market under its spell, Pinduoduo expanded overseas with Temu, using the same model that had ensured its previous success. According to Mr Rein, who is based in Shanghai, the firm has become a great source of pride and patriotism.
“They’re proud that Chinese companies can slay the e-commerce dragons from the United States like Amazon,” he adds.
A quick scroll through the Temu app or website will bring up anything from steel-toecap trainers to a device designed to help the elderly and pregnant women put on socks. A menagerie of manufactured goods, almost entirely produced in factories in China, Mr Rein explains.
China’s consumers are adjusting their purchasing habits and big players are adjusting their strategies to the search for cheaper products. Marketing expert Ashley Dudarenok looks at the changed strategy of Alibaba’s Taobao for the Double 12 festival, she says at marketing-interactive.
Marketing-interactive:
China has seen an abundance of huge shopping festivals over the years. However, the increasing dissatisfaction with complicated discount systems and the oversaturation of shopping events highlights a need for eCommerce platforms to innovate and align with evolving consumer preferences, said ChoZan’s Dudarenok…
The latest revamp also shows that Taobao is adapting to a change in consumer sentiment. Given the “general disinterest in shopping due to economic uncertainties” among Chinese consumers, shifting towards promoting value and affordability could serve as a strategy to re-engage customers and sustain sales, according to Ashley Dudarenok, founder of China digital consultancy ChoZan.
“Chinese consumers are also tired of the complicated discount systems. Taobao usually offers discounts through the “满减优惠” method (e.g, 50 yuan off for every 300 yuan spent),” she added.
By shifting its focus towards offering products of better quality at reasonable and affordable prices for consumers, Taobao’s move will benefit consumers as well as small to medium-sized brands.
Sharon Gai is an e-commerce author, keynote speaker, and former head of global key accounts at online retail giant Alibaba.
She says the way retail apps are designed in China is “fundamentally very different” from businesses in the West, which tend to focus more on search functionality.
“So their primary goal is to get you into an app very quickly, and then out of the app very quickly as well,” Gai said.
“In China, shopping apps are oriented around discoverability — how long can we keep you inside the app, how long can we entertain you, [and] how many new brands or products or trends or styles can you discover?”
Gai also said China’s huge domestic ecommerce market — which recorded almost $3 trillion in sales last year — enables platforms like TEMU and Shein to find the best formula for attracting new customers.
But while Chinese apps have been able to adapt their models to dominate US, UK and Australian markets, Western apps are struggling to achieve the same success bringing their business to China.
Last week, corporate social media giant LinkedIn announced it was shutting down its China service, InCareer, after pulling its main platform from China in 2021.
According to Gai, what sets Chinese and Western apps apart is how fast they are able to respond to the market’s needs
She said at Alibaba, the team motto “changing the motor of the aeroplane, when you’re flying in the air” means moving fast to address the market.
Gai says it’s this speed that has allowed Chinese companies to adapt to Western markets and become the preferred platforms for shoppers worldwide.
Shein, Temu and TikTok have become winning platforms on the internet, and for a good reason, says e-commerce expert Sharon Gaiat the Rest of the World. “Globally you have an economic slowdown, so a lot of consumers are also spending less per platform,”
The Rest of the World:
When Temu launched in September 2022, it also drew people in with low prices. In February, it broadcast an ad during the Super Bowl encouraging viewers to “shop like a billionaire” and fill their virtual carts without having to worry about the cost. That weekend, Temu racked 426,000 app downloads in the U.S., according to digital analytics company Sensor Tower.
“Globally you have an economic slowdown, so a lot of consumers are also spending less per platform,” Sharon Gai, the former head of global key accounts at Alibaba and author of Ecommerce Reimagined, told Rest of World. “When there’s a low-cost e-commerce platform that’s emerged out of nowhere, they are obviously going to like it.”
The 2023 Hurun China rich list sees changes, and Rupert Hoogewerf, the Hurun Report chairman and chief researcher, sees efforts to go global as a key factor for growing riches, he tells Reuters. PDD’s Temu, ByteDance’s short-video platform TikTok, and ultra-fast fashion brand Shein he sees as examples.
Reuters:
The founder of PDD Holdings saw his wealth swell by US$13.8 billion (S$18.8 billion) in a year, as a slowing global economy drove more shoppers to the Chinese company’s discount e-commerce platforms Temu and Pinduoduo, an annual rich list showed on Tuesday.
Mr Colin Huang, who founded PDD in 2015 and stepped down as chief executive in 2020, was the fastest riser in 2023’s Hurun Rich List, leaping seven places to be ranked China’s third-richest man, with a US$37.2 billion fortune. It also marked the first time he had broken into the top three ranking.
The growth of his fortune reflects the changing e-commerce landscape both in China, where consumer confidence remains low after three years of Covid-19 curbs, and abroad, where shopping platforms such as Temu and Shein are gaining steam. PDD did not immediately respond to a request for comment.
Billionaire Jack Ma, founder of rival Alibaba, which is currently going through a restructuring and working to fend off competition from the likes of PDD, fell one place from 2022 to the 10th spot.
The number of Alibaba shareholders on the list, which ranks China’s wealthiest people with a minimum net worth of 5 billion yuan (S$952.4 million), fell from 18 in 2022 to 12 this year.
Mr Richard Liu, who founded e-commerce giant JD.com, saw his wealth, and that of his wife Zhang Zetian, fall by US$6.2 billion since 2022 to US$8.26 billion, according to Hurun’s list.
JD.com’s shares fell to a record low earlier in October after banks cut its price targets, citing a weaker-than-expected recovery in consumer spending.
“Going global has been one of the key sources of growth this year,” said Mr Rupert Hoogewerf, Hurun Report chairman and chief researcher, citing PDD’s Temu, ByteDance’s short-video platform TikTok and ultra-fast fashion brand Shein as examples.
The founder of bottled water brand Nongfu Spring, Mr Zhong Shanshan, retained his first place on the list for the third year running, with a US$62 billion fortune; while Mr Pony Ma, founder of social media and gaming giant Tencent, was second, with US$38.6 billion.
