China’s Pinduoduo to Enter US Market in First International Step

Bloomberg2022-08-22 19:46

Slowing Chinese economy makes search for growth more urgent

PDD pioneered social e-commerce and group buying in China

Pinduoduo Inc., one of China’s biggest e-commerce operators, is preparing to enter the North American market in its first cross-border expansion, according to people familiar with its plans.

The Shanghai-based company is looking for new growth avenues at a time when its domestic economy is sputtering, and will follow in the footsteps of successful international ventures like Shein and AliExpress. It’s currently preparing its merchant partners for the move, the people said, asking not to be named as the matter is not yet public.

The company didn’t immediately respond to an inquiry seeking comment.

US-traded PDD holds roughly a 13% share of Chinese online retail, according to industry intelligence firm EMarketer, and has in recent times curtailed its heavy investment in online groceries, which were seen as the most promising new outlet for growth in the country. As it adopts more cost-control measures, the US market offers an enticing outlet to use its existing infrastructure and merchant network internationally.

Despite a late arrival, PDD broke through in China’s highly competitive internet retail space by bringing in social e-commerce practices that have helped build an annual active user base of more than 880 million. It won over shoppers by creating a sort of WhatsApp-Groupon mashup, where consumers spot deals on products, like toys and fruits, and then recruit friends to buy at a discount.

The company has largely withstood macroeconomic headwinds this year and is projected to report 2.5% growth in revenue for the second quarter. Market leader Alibaba Group Holding Ltd., which runs AliExpress as its international arm, logged its first-ever sales contraction during the same period.

Regulatory risks still loom large. PDD is one of the few remaining Chinese companies that have shares trading only in the US while tensions rise over audit practices. That’s led to speculation that PDD will eventually seek to list its stock in Hong Kong or another nearby exchange.

An earlier report by Late Post put the timing of a US app launch by PDD in September and said the company had reassigned senior executives and staff from other divisions to help lead its cross-border push.

source：Bloomberg