WHY PINDUODUO'S TEMU IS HERE TO STAY

Yesterday, we published our latest Temu Watch report on Tech Buzz China. The theme of issue 7 is the impact that US tariffs and the cancellation of the $800 de minimis tax exemption will have on the Chinese webshop.

In the new report, we look at all the coping strategies merchants and platforms have to deal with these challenges, especially how Temu is responding.

Those paying attention to our reporting on Temu will know that the company has already implemented measures in anticipation of the US policy changes. In March 2024, it launched a semi-managed model, encouraging merchants to store their goods in overseas warehouses. It has also used supply chains in other countries and adjusted its pricing strategies. As I predicted, Temu's price difference with Amazon has shrunk from 30-50% to a mere 10-15%, and in some cases, Temu is even more expensive.

I have been following Temu's parent company, Pinduoduo, for many years and have gained an essential insight. Whether it is the main Pinduoduo app, PDD's grocery division Duoduo Maicai or its cross-border division Temu, the whole organisation is run like a military operation. Not only is the company very lean and mean compared to its Chinese competitors, having only a fraction of the number of employees of the other players, but it can also relocate staff very quickly to wherever they are needed most, organisationally and geographically.

Last year, we did proprietary research into PDD's HR policies for an e-commerce company. We found that it was common for employees to hear that they were reassigned to new business units and had to pack their stuff to move to the other end of China, or even abroad ... that same week!

And if you have been paying attention to the job changes of e-commerce specialists in your region, especially other Chinese players, you will see that many have defected to 'the other side'.

While the US might be relatively fast with the abolishment of de minimis (before it even had the organisation in place and therefore had to postpone further implementation), the EU is taking 4 years to change the 150 euro tax exemption. By the time it will have raised its walls and parapets against the orange army, Temu will already have conquered a large part of the city.

The new Temu Watch #7 report details how Temu is dealing with these and future challenges of changing regulations. One of the significant findings is that Temu won't reach its goal of breaking even in 2025, but it has adjusted its global GMV target from $100 billion to $80-$90 billion. But the company won't be stopped. Its army's charge forward might be slower, but it is still expected to break even in 2026.

Head here for the full report: techbuzzchina.substack.…

-Ed