What is PDD Holdings' strategy to compete with global e-commerce giant Amazon?

PDD's Temu platform has been promoting products already in U.S. warehouses and trying to tap more local sellers, but it is facing stiff competition from Amazon, which has leveraged its scale to negotiate favorable pricing with suppliers.

How has the Chinese government's push for increased domestic consumption affected PDD Holdings' financial performance?

The Chinese government's efforts to boost consumption have led major e-commerce players, including Pinduoduo, JD.com, and Alibaba, to offer steep discounts and promotional offers, sparking a fierce price war that has put pressure on PDD's margins.

Home / Business and Economy / PDD Holdings Profits Decline Amid Investments to Ward Off Competition

PDD Holdings Profits Decline Amid Investments to Ward Off Competition

25 Aug

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Summary

PDD Holdings' quarterly revenue beats estimates despite profit drop
Increased investments in merchant support and international shipping drive down margins
Intensified competition in e-commerce market leads to price wars and choppiness in financials

PDD Holdings Profits Decline Amid Investments to Ward Off Competition

In the second quarter of 2025, PDD Holdings, the parent company of e-commerce platforms Pinduoduo and Temu, saw its revenue rise 7% year-over-year, beating analyst estimates. However, the company's operating profit fell 21% as it ramped up investments to support its merchants and cope with rising competition in the Chinese and international e-commerce markets.

The Chinese government has been pushing for increased domestic consumption to revive the country's sluggish economy, leading major e-commerce players like Pinduoduo, JD.com, and Alibaba to offer steep discounts and promotional offers. This has sparked a fierce price war, putting pressure on PDD's margins. Additionally, the company's costs have risen due to its multibillion-dollar investment in merchant support programs and higher international shipping expenses driven by U.S. tariffs.

To address these challenges, PDD's international platform Temu has been promoting products already in U.S. warehouses and trying to tap more local sellers. However, Temu is facing stiff competition from global e-commerce giant Amazon, which has leveraged its scale to negotiate favorable pricing with suppliers.

PDD's co-CEO Jiazhen Zhao acknowledged that the company's profit levels are not sustainable and expects fluctuations in its financial performance in the coming quarters as it continues to invest in improving its ecosystem for merchants and consumers. The company's U.S.-listed shares rose 1% following the earnings report, after jumping more than 11% in premarket trading.

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