Pinduoduo

Pinduoduo Inc.

Pinduoduo's headquarters are inside the Jin Hongqiao International Center, Shanghai.
Native name	拼多多
Company type	Public
Traded as	Nasdaq: PDD Nasdaq-100 component
Industry	Internet Agriculture
Founded	2015; 9 years ago (2015)
Founder	Colin Huang Zheng
Headquarters	Shanghai , China
Key people	Lei Chen[1]
Products	E-commerce Agriculture
Revenue	US$ 34,981 million (2023)[2]
Net income	US$ 8,479 million (2023)[2]
Total assets	US$ 49,040 million (2023)[2]
Number of employees	17,403 (2023)[2]
Parent	PDD Holdings
Website	www.pinduoduo.com

Pinduoduo Inc. (Chinese: 拼多多; Pinyin: Pīn duōduō) is a Chinese online retailer with a focus on the traditional agriculture industry. The business is the largest product of PDD Holdings, which also owns the online marketplace Temu.^[3][4]

History

Pinduoduo was founded in 2015 by Chinese businessman and software engineer Colin Huang and initially focused on the agriculture industry.^[5][6]

On 7 June 2018, Legal Evening News reported that Pinduoduo investigated and shut down stores and removed listings that violated its platform policy against pornography and violence, following an earlier report by the newspaper.^[7]

On 20 January 2019, Pinduoduo reported to the police theft by hackers that exploited a loophole in their system and stole tens of millions of Yuan worth of vouchers.^[8]

During the initial COVID-19 lockdown in China in 2020, Pinduoduo started a program to assist rural Chinese farmers with selling their produce to customers online instead of relying on traditional in-person marketplaces.^[9] In August 2020, Pinduoduo launched Duo Duo Maicai, a service which enables consumers to preorder groceries for pickup at designated locations.^[10]

Pinduoduo generated RMB 2.44 trillion (US$383 billion) gross merchandise value (GMV) in 2021.^{[11][needs update]}

In September 2022, Pinduoduo's sister's company, Temu, was launched in the U.S. by PDD Holdings.^[12][13][14]

In 2023, PDD Holdings changed its legal domicile from Shanghai to Dublin.^[15]

Criticism

Counterfeit products

Pinduoduo has been significantly criticised in domestic Chinese media for selling shanzhai products.^[16]: 34 The company responded with an open letter stating that it had, in a single week in August, shut down 1,128 stores, taken down more than 4 million listings, and blocked 450,000 suspected counterfeit goods listings from being published.^[17]

After it was listed on the Nasdaq stock exchange in 2018, China's State Administration for Market Regulation announced probes into the firm based on reports of counterfeit materials available on the platform.^{[18][16]: 34} Pinduoduo responded by intensifying efforts to remove counterfeit materials from its store.^[16]: 208 According to the company, it removed over 10.7 million suspicious items and blocked 40 million suspicious links on its platforms.^[16]: 208 Pinduoduo sought to reassure customers by stating that it would compensate customers with ten times the value of any counterfeit item found to have been sold through the platform.^[16]: 208 This was three times as much as the compensation mandated by China's Consumer Protection Law.^[16]: 208

Pinduoduo also introduced a penalty on sellers of items under which it would freeze ten times the trading volume of any item found to be counterfeit.^[16]: 208 One thousand sellers responded with a protest in July 2018 at the company's headquarters, during which there were physical clashes with the company's security guards.^[16]: 208 Sellers have also challenged Pinduoduo's penalty in court, but as of at least 2021 Pinduoduo won a significant majority of these cases.^[16]: 208

In April 2019, Pinduoduo was first named in the Office of the United States Trade Representative's list of Notorious Markets for Counterfeit Products and Piracy.^[19][20][21] As of 2023^[update], Pinduoduo remains listed as a notorious market.^[22]

The company also disclosed that it had removed 500,715 items and closed more than 40 stores as of February 4, 2020, to protect consumers from counterfeit and substandard masks being sold by merchants hoping to profit amid the COVID-19 pandemic.^[23]

Malware concerns

In 2023, Google removed Pinduoduo's app from the Play Store after a Chinese cybersecurity firm found malware in app versions carried in Chinese app stores.^[24][25][26] Two days after releasing an update to address concerns, Pinduoduo disbanded the team of engineers and product managers who had developed the exploits. A majority of the team was transferred to Temu, working in various departments.^[26]

Six cybersecurity teams interviewed by CNN – including Finnish, Russian, US, and Israeli firms – as well as Chinese cybersecurity firm DarkNavy, all labeled Pinduoduo as malware or potential malware.^[26] In a report by Bloomberg News, a researcher from Kaspersky Labs stated the following: "Some versions of the Pinduoduo app contained malicious code, which exploited known Android vulnerabilities to escalate privileges, download and execute additional malicious modules, some of which also gained access to users' notifications and files".^[27]

Pinduoduo maintains a data sharing agreement with a unit of the People's Daily, the official mouthpiece of the Central Committee of the Chinese Communist Party.^[28]

Non-compete agreements

In 2024, the Financial Times and The Wall Street Journal reported that Pinduoduo sued several former employees for violating non-compete clauses. The evidence Pinduoduo submitted to court includes video recordings of the former employees going to work for Pinduoduo's rivals. The company said it does not "engage in any illegal or unethical surveillance practices of current or former employees."^[29][30]

References

1. Bera, Ayanti (1 July 2020). "China's Pinduoduo appoints Lei Chen as chief executive officer". Reuters. Archived from the original on 1 July 2020. Retrieved 6 July 2020.
2. "PDD Holdings". Fortune GLobal 500. Fortune. Archived from the original on 2024-06-12. Retrieved 2024-08-24.
3. "PDD Holdings names Jiazhen Zhao co-CEO". Reuters. 2023-04-04. Archived from the original on 2023-04-05. Retrieved 2023-04-05.
4. "The mysterious rise of the Chinese ecommerce giant behind Temu". Financial Times. Archived from the original on 2024-03-07. Retrieved 2024-03-07.
5. Kharpal, Arjun (22 April 2020). "Everything you need to know about Pinduoduo, the fast-growing rival to Alibaba and JD in China". CNBC. Archived from the original on 3 July 2020. Retrieved 1 July 2020.
6. Liao, Rita. "Why Pinduoduo is putting all its profit into agriculture". TechCrunch. Archived from the original on 27 August 2022. Retrieved 27 August 2022.
7. "Why did Pinduoduo respond? Close the store involved and remove the illegal products from the shelves". Sohu (in Simplified Chinese). 2018-06-07. Archived from the original on 2018-06-12. Retrieved 2018-09-20.
8. "Hackers Take Coupons Worth Tens of Millions of Yuan on Pinduoduo". Bloomberg News. Archived from the original on 2019-06-17. Retrieved 21 August 2020.
9. Mullin, Kyle (7 June 2021). "China's Quiet Ecommerce Giant Thrives on Fresh Produce". Wired. Archived from the original on 10 March 2023. Retrieved 4 March 2023.
10. Bala, Sumathi (17 November 2020). "China's Pinduoduo expects online grocery sales to double this year". CNBC. Archived from the original on 17 February 2021. Retrieved 13 January 2021.
11. "In 2021, Q4 pinduoduo's revenue was 27.23 billion yuan, with a year-on-year increase of 3% From Pinduoduo". Fresh Research reports and Daily Fintech briefings. Archived from the original on 27 August 2022. Retrieved 27 August 2022.
12. Fan, Cafe (10 November 2022). "Will battle for US consumer wallets intensify with latest contender Temu?". TechNode. Archived from the original on 29 November 2022. Retrieved 29 November 2022.
13. Lu, Shen; Huang, Raffaele (2022-09-02). "China's Pinduoduo Quietly Launches U.S. E-Commerce Site Temu". The Wall Street Journal. ISSN 0099-9660. Archived from the original on 2022-09-03. Retrieved 2022-09-04.
14. Liao, Rita (20 September 2022). "Amazon's latest challenger is China's online dollar store Pinduoduo". TechCrunch. Archived from the original on 22 September 2022. Retrieved 22 September 2022.
15. Maruf, Ramishah (2023-06-28). "Shein sent American influencers to China. Social media users are furious". CNN. Archived from the original on 2023-06-29. Retrieved 2023-06-29.
16. Zhang, Angela Huyue (2024). High Wire: How China Regulates Big Tech and Governs Its Economy. Oxford University Press. ISBN 9780197682258.
17. Soo, Zen (23 August 2018). "Pinduoduo removes millions of suspected fake listings after stock plunges". South China Morning Post. Archived from the original on 7 July 2020. Retrieved 6 July 2020.
18. Goh, Brenda (1 August 2018). "China to probe e-commerce firm Pinduoduo over reports of fake goods". Reuters. Archived from the original on 6 July 2020. Retrieved 6 July 2020.
19. "USTR Releases Annual Special 301 Report on Intellectual Property Protection and Review of Notorious Markets for Piracy and Counterfeiting". United States Trade Representative. April 25, 2019. Archived from the original on 2023-04-02. Retrieved 2023-09-08.
20. Singh, Kanishka (2022-02-18). "U.S. adds e-commerce sites operated by Tencent, Alibaba to 'notorious markets' list". Reuters. Archived from the original on 2022-02-19. Retrieved 2022-02-18.
21. "USTR Releases 2021 Review of Notorious Markets for Counterfeiting and Piracy". United States Trade Representative. Archived from the original on 2022-02-19. Retrieved 2022-02-18.
22. "USTR Releases 2022 Review of Notorious Markets for Counterfeiting and Piracy". United States Trade Representative. January 31, 2023. Archived from the original on 2023-09-04. Retrieved 2023-09-08.
23. Lee, Emma (6 February 2020). "E-commerce firms cracking down on sellers of fake protective masks". TechNode. Archived from the original on 7 July 2020. Retrieved 6 July 2020.
24. Leong, Clarence; Purnell, Newley (2023-03-21). "Google Halts Download of Chinese App Pinduoduo Over Security Concerns". The Wall Street Journal. ISSN 0099-9660. Archived from the original on 2023-03-21. Retrieved 2023-06-25.
25. "Google Suspends Chinese E-Commerce App Pinduoduo Over Malware". Krebs on Security. 22 March 2023. Archived from the original on 2023-04-05. Retrieved 2023-04-05.
26. Gan, Nectar; Xiong, Yong; Liu, Juliana (2023-04-02). "'I've never seen anything like this:' One of China's most popular apps has the ability to spy on its users, say experts". CNN. Archived from the original on 2023-04-05. Retrieved 2023-04-05.
27. Zheng, Sarah (27 March 2023). "Pinduoduo App Malware Detailed by Cybersecurity Researchers". Bloomberg News. Archived from the original on 2023-03-28. Retrieved 2023-09-28.
28. Cadell, Cate (May 1, 2024). "Report: China's propaganda units harvest data from overseas tech firms". The Washington Post. Retrieved May 2, 2024.
29. "Ex-workers at Temu owner PDD suffer surveillance and financial ruin over non-competes". Financial Times. March 11, 2024. Archived from the original on 2024-03-11. Retrieved 2024-03-11.
30. Lu, Shen; Huang, Raffaele (April 1, 2024). "Ex-Workers at Temu Parent Say Noncompete Penalties Crush Their Finances". The Wall Street Journal. Archived from the original on 2024-04-01. Retrieved 2024-04-02.

External links

• Official website
• Business data for Pinduo Inc.:
  • Bloomberg
  • Google
  • Reuters
  • SEC filings
  • Yahoo!