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China’s budget-focused Pinduoduo launches Shein-style app to woo US consumers with cheap fast fashion

  • Pinduoduo has a new app called Temu targeting US consumers, featuring cheap apparel like 77-cent earrings and a US$4 dress
  • The Shanghai-based company beat expectations in the second quarter amid weakening consumer spending in China, as it seeks to expand overseas

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Pinduoduo, known for its budget offerings and popular with price-sensitive consumers, has launched a new apparel app targeting US consumers to compete with Shein. Photo: Imaginechina via AFP
Tracy QuandAnn Cao

Shanghai-based e-commerce company Pinduoduo, which surprised investors this week with strong second-quarter performance, has launched a Shein-style app to woo US consumers with offerings such as earrings that cost just 77 US cents or a US$3.76 dress.

The app called Temu is operated by Whaleco Inc, a US-based company that Chinese media LatePost reported is owned by Pinduoduo. The app puts the budget e-commerce firm in direct competition with fast-fashion platform Shein, as it eyes overseas expansion amid a slowing economy at home.

Registration information for a Chinese website inviting merchants to sign up as vendors on Temu also shows the site as owned by Pinduoduo. The company did not respond to requests for comment.

The Nasdaq-listed firm joins Chinese rival Shein by bringing made-in-China apparel directly to US consumers. It has even matched Shein’s free shipping for orders of US$49 or more.

Known for its cut-to-the-bone deals, Pinduoduo has weathered economic headwinds in China better than others. Its better-than-expected revenue and profit for the second quarter far exceeded growth at competitors JD.com and Alibaba Group Holding, owner of the South China Morning Post.

Its revenue jumped 36 per cent for the quarter, while profit skyrocketed by 268 per cent. Alibaba barely reported any revenue growth, and JD.com, China’s second largest e-commerce company, reported 5.4 per cent revenue growth in the same period.

Pinduoduo, founded by billionaire Colin Huang in 2015, has grown quickly through the use of discounts offered when users promote goods on social networks. It is seen as a platform for more price-sensitive consumers, helping it stay resilient amid lower spending in China, where consumer confidence has been bruised by rising unemployment and bleak economic projections.

“If you look at other e-commerce companies such as Alibaba and JD.com, their performance was [affected], as the economic environment is not good,” said Tsz Wang Tam, a Hong Kong-based equity analyst at DBS Bank. “But Pinduoduo is special. It maintained strong growth amid the macro environment.”

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