Temu's Chinese owner sees revenue growth slow

TDT | Manama

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Shanghai-based e-commerce giant PDD Holdings, the owner of discount shopping platform Temu, reported a slowdown in revenue growth for the third consecutive quarter, citing increasing trade tensions between China and the United States.

The company posted revenues of 110 billion yuan ($15 billion) for the fourth quarter ending December 31, marking a 24 percent year-on-year increase. However, this was significantly lower than the 44 percent growth recorded in the previous quarter and a sharp decline from the 86 percent and 131 percent surges seen earlier in 2024.

As the operator of Temu, one of the fastest-growing online shopping platforms in the U.S., PDD Holdings is facing new hurdles following a series of U.S. policy changes targeting Chinese imports. Earlier this month, U.S. President Donald Trump doubled tariffs on all Chinese imports from 10 to 20 percent, further intensifying economic friction between the two countries.

The move follows the administration’s February decision to scrap a customs exemption for goods valued under $800—a key advantage for low-cost platforms like Temu and its rival Shein. These companies have relied on the exemption to ship billions of dollars' worth of goods directly to U.S. consumers without incurring additional tariffs.

Despite the challenges, PDD Holdings executives remain optimistic. "Looking ahead, we will continue to prioritize investments in the platform ecosystem as the cornerstone of our long-term value creation strategy," said Jun Liu, the company’s vice president of finance.

The company reported a net income of 27.4 billion yuan for the fourth quarter, an 18 percent increase from the previous year. However, the results fell short of market expectations, leading to a 3.3 percent dip in PDD Holdings' U.S. shares in pre-market trading, according to Bloomberg.

PDD Holdings also owns Pinduoduo, a leading e-commerce platform in China that has successfully expanded into rural markets by offering a diverse range of low-cost products.

The earnings report comes as analysts closely monitor the performance of Chinese e-commerce giants for signs of a rebound in consumer spending. While Alibaba posted an 8 percent growth rate in the fourth quarter, JD.com reported a slightly higher 13.4 percent increase.

To stimulate domestic consumption, Beijing has introduced various economic measures, including interest rate cuts and subsidies for home appliances. However, whether these policies will be enough to counteract external pressures remains to be seen.