This week, hundreds of retailers in southern China staged a rally against what they called harsh penalties that Temu’s proprietor is extremely imposing.
According to visitors and movies that were posted on social media, the suppliers, mainly smaller outfits that sell Chinese goods to American consumers via the rapidly expanding Temu system, displayed placards and yelled slogans outside a Guangzhou business island on Monday. Some employees escaped from Temu offices, but some ultimately dispersed without speaking with top executives, according to several testimony, who pleaded not to be identified out of fear of reprisal.
As PDD embarks on a costly global growth, the rally was the climax of growing disappointment among independent retailers and third-party sellers. According to the individuals, PDD’s policy of withholding payments to merchants is what they accuse of abusing client expectations. That includes everything from mismatched product descriptions to delivery dates that go missing.
Those fines or sanctions have risen sharply in recent months, frequently without apparent reason, they said. People added that PDD or Temu frequently levy fines more than three times the wholesale prices or withhold payment for already-sold materials. PDD’s stocks slid 3.5 % in New York, their biggest single-day drop since June.
The debate comes at the same time as a significant global development that has expanded the Temu company. In 2023, PDD and its Temu system ran a pricey Super-Bowl advertisement, which exploded onto the field. It’s since begun to challenge other Taiwanese online shopping huge Shein, and yet Amazon.com Inc in particular segments. This quarter, it only recently launched in Thailand.
Pinduoduo, the US-listed PDD, outstripped longstanding rivals Alibaba Group Holding Ltd and JD.com Inc., who at one stage led the country’s most important e-commerce company.
According to the people, the protests this week have resulted in at least two gatherings since May, some of which have been described by local press, including Yicai. A rep for Temu acknowledged that the company is at odds with about a hundred sellers over “after-sales issues” involving the conformity of their goods. The member claimed that there were several million yuan in the dispute.
The spokesperson declined to provide further information about Monday’s actions, saying that several of those retailers had just gathered outside a Temu logistics advertising.
The company stated in a statement that” these merchants have chosen not to solve the problems using the standard arbitration and legal programmes set forth in the seller agreements.” The business is constantly working with the merchants to find a solution, the firm said.” The situation is secure.”
Temu is traveling overseas partly as a result of declining home Chinese consumption and recovering from years of Covid-era lethargy. But many others, including Shein, ByteDance Ltd’s TikTok Shop and Alibaba’s individual AliExpress have the same concept. That is threatening to increase costs and reduce profits.
Beijing, the driving force behind Shein and Temu’s rapid rise in the US, has publicly supported what they call cross-border e-commerce or the price of Chinese products worldwide. However, reports about growing unsatisfaction among Temu’s China-based merchants, who make up the majority of the inexpensive, quick-moving goods that consumers are buying overseas, started to surface this year.
The key is whether Temu can attract customers back, according to some analysts, who believe the loss-making company wo n’t be able to sustain its combination of affordable prices and quick delivery for a while. According to some, the business may be a significant global player in the future.
What Bloomberg knowledge claims
According to media studies, persistent tensions between PDD’s Temu and Chinese traders have caused protests in China to occur. Were these programs exempt from defections, such as Amazon.com, AliExpress, Shein, and TikTok Shop, where our tests reveal more flexible business methods? Apeasing traders would increase costs and cause PDD’s percentage declines to be steeper than expected going forward until 2025.
– Catherine Lim and Trini Tan, experts
It’s questionable whether PDD is making moves to soothe stores. Suppliers and sellers moving to other platforms could cause a disruption in Temu’s supply chain, which would help the startup system’s development.
In the March fourth, PDD’s revenue more than doubled. Although it has grown to more than 60 countries, regulatory scrutiny in important areas like the US, which has stifled ByteDance’s possession of TikTok due to concerns about data protection.
This year, consumer groups in Europe lodged a complaint with the European Commission, alleging Temu had used deceitful tactics and failed to protect customers.
