about 1 year ago • 2 mins
Chinese ecommerce platform Pinduoduo revealed some eye-catching quarterly results on Monday.
What does this mean?
Folk wisdom says that lockdowns are bad for everyone besides Netflix and online shops – and the success of ecommerce firm Pinduoduo, amid China’s record Covid infections and locked-down cities, seems to confirm that. After all, you don’t stop buying groceries when you need to stay home: you just use a platform like Pinduoduo instead. Fresh produce, consumer electronics, and cosmetics were key money-makers last quarter: as consumer spending recovered, they catapulted the firm’s revenue well past analyst expectations, to beat the same quarter last year by a stone-cold 65%. No wonder investors pushed the company’s sturdy stock up 15% when the news broke.
Why should I care?
Zooming in: Heading for the heart of the Amazon.
Not content with domestic success, Pinduoduo’s already making moves overseas, launching the US shopping site Temu just a few months ago. But the going won’t be easy. For one, Temu’s encroaching on the territory of none other than Amazon, the titan of titans. And for another, the firm’s one- or two-week shipping times won’t endear it to impatient customers used to breakneck delivery. What might sweeten the deal, though, are its prices: the firm’s close ties with low-cost Chinese manufacturers keep its offerings cheap and cheerful.
The bigger picture: It’s crunch time.
The eruption of volcanic anti-lockdown protests in China has caught the world’s attention and put the government in an awkward bind: either perform a very public U-turn and risk a surge in deaths among the under-vaccinated elderly – or crack down and hope a flourish of the iron fist puts any further criticism to bed. And while economists at Abrdn don’t see China wavering from its zero-Covid approach in the near-term, those at Goldman Sachs reckon there’s a 60% chance the country will reopen before next July.
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