How Pinduoduo’s Fast Rise Is Helping China With Cross-Border E-Commerce

Chinese e-commerce has a No. 2 player in Pinduoduo and the government is supporting cross-border e-commerce by adding new cities with special trade privileges, according to reports.

In less than four years since it sprang into the Chinese consciousness, Pinduoduo now has 139 million daily active users, behind Taobao’s 299 million but well ahead of the 88 million shoppers who log on to JD.com daily, per QuestMobile data.

The mobile group-buying app drops prices when more friends and family purchase the same item, a concept that’s caught on like wildfire in China’s lower-tier cities where cost-conscious consumers are always hunting for the next good deal.

Those low prices, however, factor into why Pinduoduo led JD.com in users but lagged in gross merchandise volume for 2018 with $68.6 billion compared with $243.9 billion last year. And because Pinduoduo has become known for the lowest prices around, it’s also been caught hosting counterfeits as sellers seemingly look for ways to cut corners.

Pinduoduo, backed by internet giant Tencent, landed on the U.S. trade representative’s blacklist in April alongside other international marketplaces soiled by rampant counterfeiting. It’s pulled millions of questionable product listings from its site over the years in an effort to thwart bad actors, who’ve similarly plagued Alibaba and JD.com with a steady stream of knockoff goods.

Though Pinduoduo’s customers want low prices above all else, a growing body of Chinese consumers is finding peace of mind from buying reputable brand-name goods directly imported from abroad. Early this month the Chinese government announced support for a new group of cross-border e-commerce pilot cities beyond the 35 already established, according to a Reuters report. China reportedly sees the cross-border initiative as a way to shore up trade amidst ongoing tensions with the U.S.

In January, Ningbo cemented its position as the No. 1 Chinese city for cross-border commerce, $2.3 billion in imports moving into the city in 2018, China Daily reported. That figure, 83% higher than the prior year, represented 40% of cross-border commerce country-wide as 30 million more consumers participated in purchasing goods brought in from overseas to the eastern China port city south of Shanghai.

Editor’s Note: This story was reported by FN’s sister magazine Sourcing Journal. For more, visit Sourcingjournal.com.

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