Temu’s Rapid Growth Is Facing New Pressure

Competition Remains Fierce in China

PDD competes with Alibaba’s Taobao and Tmall, JD.com and ByteDance-owned Douyin, with discounts, subsidies and incentives being used to attract consumers and merchants.

Consumer spending in China remains under pressure. Weak confidence, concerns over job security and the prolonged property downturn have kept shoppers cautious and contributed to an ongoing price war in the country’s e-commerce sector.

Spending was also subdued during this year’s 618 shopping festival despite extensive promotions and discounts.

PDD has increased spending on logistics and merchant support programmes to reduce fulfilment costs and offer better value to consumers. The additional investment has also raised concerns among investors about pressure on profitability.

Temu Faces Higher Costs Overseas

Temu is dealing with a different set of challenges outside China. Its international business has grown by connecting consumers with low-cost goods shipped directly from Chinese suppliers. In the US, however, tariffs on Chinese imports and the end of duty-free treatment for low-value parcels have increased pressure on this model.

Higher shipping and compliance costs have led some merchants to raise prices, potentially affecting demand among price-sensitive shoppers. Low-value e-commerce shipments have also declined in recent months as changes to tariffs and trade rules disrupted cross-border sales.

Europe is tightening its approach to inexpensive imports as well. Policymakers have stepped up efforts to address the volume of low-cost goods entering the market through platforms including Temu, Shein and Alibaba’s AliExpress.

The European Union’s newly introduced fee on small parcels imported directly from China is expected to increase costs for sellers and consumers.

Those additional costs could put pressure on Temu’s price advantage and make it more difficult to maintain the pace of international growth that has helped drive investor interest in PDD.