Chinese e-commerce discounter PDD Holdings reported an eight per cent rise in second-quarter revenue on Monday that missed market estimates as fierce competition in China and mounting regulatory pressures overseas weighed on growth. The operator of Pinduoduo in China and Temu internationally posted revenue of 112.36 billion yuan (US$15.7 billion) for the three months ended June 30, below analysts’ average estimate of 116.35 billion yuan, according to LSEG data. Net income attributable to ordinary shareholders fell 12 per cent to 27.2 billion yuan. Its shares were up 4.6 per cent in volatile pre-market trading in New York. PDD competes with Alibaba’s Taobao and Tmall, JD.com and ByteDance-owned Douyin through discounts, subsidies and incentives aimed at attracting consumers and merchants. But weak consumer confidence, concerns over job security and a prolonged property downturn have kept shoppers cautious, fueling a price war across China’s e-commerce sector and squeezing margins. Consumer spending remained subdued even during this year’s “618” shopping festival, one of China’s largest online sales events, despite weeks of promotions and discounts. PDD has stepped up spending on logistics and merchant support programs to lower fulfillment costs and improve value for consumers, raising investor concerns that profitability could come under further pressure. Regulatory pressures Temu, meanwhile, faces increasing scrutiny in some of its largest overseas markets. The platform built its international business by shipping low-cost goods directly from Chinese suppliers to overseas consumers, but has been hit by U.S. tariffs on Chinese imports and the end of duty-free treatment for low-value parcels. Higher shipping and compliance costs have forced some merchants to raise prices, potentially dampening demand among price-sensitive shoppers in the United States and Europe. Low-value e-commerce goods have also attracted scrutiny, with shipments declining in recent months as changes to trade rules and tariffs disrupted cross-border sales. In Europe, policymakers have stepped up efforts to curb the influx of inexpensive goods from China through platforms including Temu, Shein and Alibaba’s AliExpress. The European Union’s newly instituted fee on small parcels imported directly from China is set to increase costs for sellers and consumers alike, industry analysts say. The added costs threaten to erode Temu’s price advantage and could make it harder for the company to sustain the rapid international growth that has helped fuel investor enthusiasm for PDD. --- Reporting by Harshita Mary Varghese in Bengaluru; Editing by Pooja Desai, Christopher Cushing and Emelia Sithole-Matarise
