CNBC reported that Temu lists items across a number of categories that include clothing, jewellery, pet supplies and home and garden.
However, it remains to be seen whether the company, which has surpassed rivals Alibaba and JD.com in China, can overcome the logistical hurdle of shipping to the US, which could take seven to 15 business days.
David Thomas, an expert on China and the CEO of Thinkglobal, believes the company will have its work cut out to become a force to be reckoned with in the US marketplace.
“I don’t see how they could become a competitor of Amazon, as their focus is pretty narrow. Amazon is a giant, and I’m pretty sure they will be seen as a hostile platform in the US market,” he told Inside Retail.
Thomas is of the opinion that consumers in the US will be wary of signing up to the company’s e-commerce platform, as users are more concerned about data security these days.
“The US marketplace is such a different proposition for the brand, customers have a lot more choices there. So I think Pinduoduo will have to operate very differently in America, as the local marketplace is highly fragmented,” he noted.
Xiaofeng Wang, principal analyst at Forrester, is also sceptical about Pinduoduo’s chances of unseating Amazon in the long term.
“Even if Pinduoduo entered the US market successfully, it won’t become Amazon’s competitor any time soon. AliExpress has been cultivating its offerings for many years in the US and is still nowhere close to competing with Amazon,” she told Inside Retail.
Not all doom and gloom
While a company like Pindoudou may face some resistance overseas, Thomas feels that Chinese companies do have some advantages in the US market.
“China’s e-commerce best practices would probably work very well in the US marketplace, as Chinese consumers have long been spoilt for choice as their online shopping experience is very advanced and it works very fast,” he noted.
Nonetheless, companies like Pindoudou will have to drastically change their business model to be successful in the United States.
“Chinese companies will need to do more than just rely on low cost labour and logistics to make a mark in the US. They will need to hire local workers, localise their business models and start taking local advice to get ahead,” he said.
Some quarters have even suggested that companies like Pindoudou are moving into markets like the US to escape scrutiny back home.
Since the late 2020s, the Chinese government has been cracking down on technology companies.
Reining in big tech
The clampdown started in November of 2020, when Ant Group, a fintech affiliate of Alibaba saw its upcoming high profile initial public offering in Shanghai and Hong Kong suspended by regulators.
Other companies like Didi, a ride-hailing company, and Meituan, a food delivery platform, were soon also targeted by the government in its push for enhanced regulatory reforms in the market.
“China has realised that these tech companies have kind of gone out of control. They’ve almost got too big for themselves. I think China didn’t want to become like America, where they’re being held to ransom by the likes of Google, Amazon and Facebook,” Thomas said.
However, Wang believes that it’s natural for companies to look for additional growth opportunities overseas when they are doing well domestically.
“Before 2020, Alibaba, TikTok, JD.com, Tencent and many other Chinese tech firms were already doing that. Pinduoduo’s ambition to expand overseas has been there, and they will take this step even if there weren’t any changes in the local regulation environment,” she noted.
As of September 2022, Pindoudou has a market cap of almost US$86 billion, and Thomas acknowledges that capital will never be a problem. But succeeding in the US will take a lot more than just cold hard cash.
“They could raise capital easily, but to be successful in overseas markets, you need to apply the whole way of thinking and appreciate the local culture and different nuances. I have my doubts about how well they can do that,” he added.
Thomas feels that companies like Pinduoduo have actually far more to gain from other markets within the ASEAN and APAC economies.
“Europe is worried about Russia, UK has got a new prime minister who is very hawkish to China, and America is deeply divided and we’ve even got the prospect of Donald Trump making a comeback, so If I was in Pinduoduo’s shoes, I [wouldn’t] be in the US,” he said.
He believes Pinduoduo would be better off concentrating on its operations in Mainland China, Hong Kong and ASEAN, as well as Australia and New Zealand.
“The US, Europe and the UK are only around 16 per cent of the world’s population, and markets like India are huge for Chinese brands, and we have seen Chinese exports there grow by about 50 per cent in the last three years or so,” he concluded.