Chinese low-price online retailer Pinduoduo, known for its Temu app and a key competitor to Alibaba, reported a significant increase in its net profit for 2023. The Shanghai-based company, which has focused on offering affordable products since its establishment in China in 2015, saw its net profit surge by 90 percent year-on-year to 60 billion yuan (8.3 billion dollars).
Pinduoduo has emerged as a formidable rival to Alibaba, with its popular Temu app gaining traction. However, the app has faced scrutiny in various countries, including France. The French National Assembly recently approved measures targeting low-cost fast fashion brands, such as imposing a ban on advertising for the cheapest textiles and introducing an environmental charge on inexpensive items. Temu's competitor Shein was specifically highlighted for its intensive fashion production practices.
Moreover, the European toy industry lobby has raised concerns about Temu's alleged non-compliance with safety standards and the marketing of products posing risks to children. Pinduoduo's co-founder and co-CEO, Chen Lei, acknowledged the early stage of the company's global business during an earnings call and recognized potential uncertainties and challenges ahead.
In the last quarter of 2023, Pinduoduo witnessed a remarkable increase in net profits, soaring by 146 percent. The company's annual sales also surged to 247.6 billion yuan (34.4 billion dollars), marking a 90 percent year-on-year growth. Pinduoduo's success is not limited to international markets; it is experiencing significant growth domestically as well. This growth comes at a time when Chinese consumers are opting for budget-friendly products amidst economic slowdown and high youth unemployment rates.
Furthermore, Pinduoduo briefly surpassed Alibaba in market capitalization in November, underscoring its increasing prominence in the competitive online retail landscape.
