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PDD , the firm behind the tight - grow shopping app Temu , is shaking up China ’s Big technical school club .
On Thursday , news of Alibaba ’s market capsliding underthat of PDD made newspaper headline all over the Formosan net . This development marked a historic shift in China ’s e - commerce space , where for year Alibaba had held the cap jewel . Now the 24 - year - old incumbent is face its greatest challenges while eight - year - sure-enough PDD catch up with an telling ascent .
PDD , which saw its market note value surge over $ 188 billion afterreportinga doubling in tax income class - over - year , is n’t even trading at its all - time heights , which was enter in former 2021 . The moment is a reminder of Alibaba ’s gradual lineage from its heights in late time .
Alibaba ’s troubles began in previous 2020 after its beginner Jack Ma publicly criticized Chinese regulation , sending shockwaves through the state ’s technical school industriousness . His input were widely reckon as the accelerator for thesuspension of the initial public offering of Ant Group , the fintech giant he created . In the two year that followed , Beijing kicked off a series of crackdowns on the internet sphere in an feat to rein in powerful role player like Alibaba .
As Ma retreat from public view , Alibabahad been working onsplitting into six independent entities , but function of the plan were short abandoned . In September , the firmsaidit decided to stop the twisting - off of its cloud computing unit , cite “ dubiousness ” activate byU.S. exportation controls of ripe cypher splintering to China . It also put the design IPO of its grocery operation Freshippo on handle . The series of news show wiped billion of dollar sign off Alibaba ’s market time value .
Meanwhile , PDD has been spurt ahead thanks to growth at home and overseas . In recent years its domesticated marketplace Pinduoduo has become a formidable challenger to Alibaba ’s Taobao , extend a broad range of low - price products and recondite shopper price reduction , though its traction has come at the cost of heavy marketing expense and squeezed merchant gross profit margin .
Undeterred by its skyrocketing gross revenue and merchandising expenses — which rose to 55.6 billion yuan ( $ 7.6 billion ) in the first nine months of 2023 , compare to 36.6 billion yuan in the same period last class — Temu has pick out its growing recipe from China to some 40 markets . The firm beget $ 21.8 billion in receipts from the first three quarter of this year .
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With its catchy tagline “ Shop like a billionaire , ” Temu ’s aggressive marketing is paying off . For the last 90 days , the app has sat at the top of the shopping category in the U.S. App Store and Google Play Store , according to market intelligence operation firmdata.ai .
Temu ’s ascent has become a menace to diligence incumbent Amazon and upstart Shein . Both targeting price - sensitive consumers and relying on supply chains in China , Shein and Temu have been in a sound battle but lately knock off theirlawsuits against each other .
Unsurprisingly , U.S. sanction already have an optic on Temu ’s rise . In April , the U.S.-China Economic and Security Review Commission under Congresspublisheda write up detail the “ challenges ” presented by Chinese dissolute fashion platforms , send for out Temu and Shein . Those challenge include “ exploitation of trade loophole ; concerns about production processes , sourcing relationships , product safety , and use of squeeze labor ; and violations of intellectual property rights . ”
Temu might become the next TikTok if its influence continues to get in the U.S. , which will then horrify politicians who regard China - affiliate apps as posing security department menace . But before any legal action to curb the platform materializes , Temu will preserve to pull in user by relentlessly spend on ads and discounts .
China ’s cutthroat e - commerce tactic goes global as Shein - Temu warfare escalates
