China

Pinduoduo Owner’s Revenue Off-Target as Spending Fall Bites

The logo of Chinese e-commerce platform Pinduoduo Inc. is displayed next to a mobile phone, in this illustration picture taken on March 22, 2022. Photo: Reuters

The owner of Chinese e-commerce platforms Pinduoduo and Temu missed expectations for its fourth-quarter revenue on Monday, underlining the brittleness of the world No2 economy’s post-Covid recovery.

US-listed shares of PDD Holdings fell 7% in premarket trading after PDD reported revenue of 39.82 billion yuan ($5.79 billion) for the quarter ended December 31, up 46% year-on-year, but short of estimates for 41.01 billion yuan, based on Refinitiv data.

The group had reported 65% revenue growth in its third- quarter earnings last November.

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PDD’s fourth quarter included only the first few weeks of China’s re-opening from its strict zero-Covid rules in December. The company’s revenue growth compares with single-digit gains reported by Chinese competitors Alibaba and JD.com for the same period.

JD.com warned in March that consumer confidence in China would take time to rebuild amid economic uncertainties.

China’s total retail sales contracted 1.8% in December, while the country’s economic growth in 2022 slumped to one of its worst levels in half a century.

Discounting campaigns by rivals have also intensified competition for PDD, which has gained market share since it first came on the scene in 2015 by targeting price-conscious consumers with discounted goods.

PDD’s fast-growing international platform Temu, which was launched in September to US shoppers, sells a variety of goods, from shoes, jewellery, electronics and homewares directly from Chinese merchants.

Temu’s gross merchandise value, the total sales before expenses, increased to $192 million in January from $3 million in September, based on analysis from data company YipitData.

Temu’s 2023 expansion will include rollouts in Canada, Australia, New Zealand and the UK.

Reuters with additional editing by Sean O’Meara

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Sean O'Meara

Sean O'Meara is an Editor at Asia Financial. He has been a newspaper man for more than 30 years, working at local, regional and national titles in the UK as a writer, sub-editor, page designer and print editor. A football, cricket and rugby fan, he has a particular interest in sports finance.