China’s market regulators probe Pinduoduo for sale of counterfeit, imitation goods

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Colin Huang, founder and CEO of Pinduoduo, speaks at an IPO event in Shanghai on July 26. Photo: Reuters

Published: 2:06pm, 1 Aug 2018Updated: 3:57pm, 21 Oct 2020

Social commerce platform Pinduoduo, whose IPO last week made its chief executive Colin Huang Zheng among China’s richest people, has found itself in the crosshairs of China’s regulators over complaints of counterfeit products sold on the platform.

The State Administration for Market Regulation (SAMR) said on Wednesday it is calling for an investigation into the sale of counterfeit products and items that infringe copyright on the Pinduoduo platform.

In a statement posted on its website, the regulator called for the Shanghai Municipal Administration of Industry and Commerce (SHAIC), as well as other relevant market regulators, to investigate Pinduoduo, which is headquartered in the city. Issues to be looked into include the sale of imitation products and counterfeits.

The investigation comes after Pinduoduo issued a statement on Tuesday stating that it has been maliciously targeted with a slew of negative press in the days following its public listing, prompting it to lodge a complaint with the China Internet Network Information Centre, the country’s media watchdog.

A Pinduoduo spokeswoman did not immediately respond to a request for comment.

Pinduoduo has come under growing scrutiny since the company filed for a public listing in the US early last month. The company operates as an e-commerce platform that lets third-party vendors sell items to consumers, pioneering a social group-buying model that offers buyers generous discounts if they share the product listing with a friend who also purchases the item. The social commerce model is part of the social+ model often adopted by internet companies in China, where business and social aspects are blended together to appeal to Chinese users, according to the China Internet Report co-authored by the South China Morning Post, Abacus and 500 Start-ups.

Within just three years, Pinduoduo has grown to become China’s third-largest e-commerce site, with a 5.2 per cent market share, behind Alibaba’s 58.2 per cent and JD.com’s 16.3 per cent.

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