Temu and Pinduoduo’s Chinese owner, PDD Holdings, has reported poor sales as Chinese customers drastically cut back on their spending. The PDD Holdings reports declining sales for the September quarter of 99.35 billion yuan, less than the 102.8 billion yuan experts had predicted.
After this news, investor fears about slowing growth were reflected in the 11% decline in PDD Holdings’ US-listed shares. After years of solid growth, PDD Holdings has missed revenue forecasts for the second straight quarter.
The company’s vice president of finance, Jun Liu, attributed the muted performance to heightened competition and outside obstacles. Due to competitors’ comparable price techniques, Pinduoduo, PDD’s Chinese platform, recognized for low-cost items, is under intense competition.
According to experts like James Yang from Bain & Company, the retail industry in China is struggling due to a slowdown in the economy and poor customer confidence. Yang said, “E-commerce growth is expected to continue, albeit at a slower pace.” highlighting the continued difficulties facing the sector.
The company’s problems have worsened due to growing issues in foreign markets with PDD Holdings’ worldwide platform, Temu. Vietnamese officials asked Temu and Shein to register, threatening to prohibit them if they didn’t comply. Temu was removed from the app stores in Indonesia in October to safeguard regional merchants.
The EU is also investigating whether Temu has allowed the selling of unlawful goods, which could result in heavy fines. President-elect Donald Trump’s intentions to increase US taxes on Chinese goods might undermine Temu’s competitive edge.
PDD Holdings reports declining sales and confronting significant hurdles at home and abroad as it navigates intensified competition and international scrutiny. The company’s ability to address these challenges will determine its future trajectory.
