How PDD radically restructures China’s supply chain to support Temu

On 27 May 2026, PDD’s stock fell after its Q1 results. The issue was not that PDD had stopped growing. Revenue was still up year-on-year. The concern was that profit had fallen, and that PDD was preparing to invest much more heavily to keep growing.

Management called supply-chain investment a core strategic priority. It also talked about building a first-party brand business – part of a broader effort that PDD has described as “building another Pinduoduo”.

One of the most interesting pieces of this effort is called 新拼姆 (Xinpinmu – or literally “New Pinduoduo & Temu”)..

According to a report by LatePost, Xinpinmu is a self-operated brand initiative under “Pinduoduo + Temu”. If Temu’s first phase was about going light, Xinpinmu is about going heavier.

Temu’s original growth model was unusually inventory-light for a de facto online retailer. It connected Chinese manufacturers and merchants with overseas consumers, pushed prices down, and avoided much of the product and inventory risk that traditional retailers carry.

Xinpinmu changes that equation.

Under the reported model, the platform creates its own brands, gives factories detailed product guidance, buys out inventory, guarantees sales, and handles pricing and marketing itself. In other words, Temu is moving closer to the kind of risk its earlier model was designed to avoid.

Why is it doing that and how has that been going? An article from LatePost shed some light. Some pointers:

1. 1. What it is: Xinpinmu is focused on apparel, home goods, and outdoor products. It is currently in talks with manufacturers producing winter jackets, rain jackets, shirts, work trousers, etc. and are estimated to start selling in Q3 this year. According to those close to Pinduoduo, Xinpinmu is currently in stage 1.0 and is expected to take 1-2 years to refine these categories before gradually expanding their catalogue. These products are not planned to be sold in China, instead Xinpinmu’s main focus will be the American and European markets.
      
      In the past, Pinduoduo and Temu’s bar for suppliers was relatively simple: they needed to have inventory and be willing to sell at low prices. But with Xinpinmu, it sells products that are more expensive, and of a higher quality. To account for this change while retaining their suppliers’ confidence, it is willing to take on more risk across additional stages by taking on the responsibility for customising products, buying out supplier inventory, and guaranteeing their sales.
       
   2. Why these categories: The choice of focusing on apparel, furniture, and outdoor products is backed by data: Apparel and furniture are Temu’s highest selling product categories, accounting for 40% and 20% of GMV respectively. Outdoor products are a category where consumers are not brand sensitive, and where demand is still underfulfilled. Food, cosmetics, and consumer electronics categories were dropped. Products with a shelf life are too risky, while electronic goods will have complicated rules and regulations to comply with, moreover consumers haven’t built up the habit of buying these products from Temu.
       
   3. The partnership model: Xinpinmu creates proprietary brands by referencing market bestsellers and its own sales data, provides OEM factories with detailed product guidance, and prohibits the products from being resold to third parties. The platform buys out the inventory, guarantees sales, and handles pricing and marketing.
      
      Xinpinmu is currently looking for suppliers with complete supply chains and design capabilities, preferably those with experience with overseas OEM manufacturing and holds relevant export qualifications. Suppliers that meet these conditions are usually mature brands with annual sales of several billion yuan. Temu is reportedly currently approaching, or has already approached, potential partners including Bosideng, Youngor, Camel, etc. If they agree to the partnership, the factories of these brands will begin producing apparel under Xinpinmu’s own brands.
      
      The purpose of working with large suppliers is to have the suppliers handle production and compliance issues themselves, thereby reducing follow-up issues for the platform.
       
   4. Many of Shein’s partner manufacturers have reportedly been invited to join Xinpinmu. (MW note: SHEIN’s core fashion manufacturing base can be very different from those mentioned above – so we find this point interesting if not perplexing).
       
   5. Pricing policy: Xinpinmu’s product pricing will still follow the value-for-money route – good value within the same quality tier. The selling price will be around 4-5 times the production cost, equivalent to about 50-70% of the price of similar products from major brands, or even lower.OEM attention: Several people close to Pinduoduo and its suppliers said the current terms are attractive to OEMs: the platform promises guaranteed sales, part of the order amount will be prepaid, and individual contracts can reach tens of millions or even hundreds of millions of yuan per year – a sizable source of incremental business for most factories.
       
   6. Rationale behind Xinpinmu: Temu has been operating for four years and has accumulated hundreds of millions of overseas users, placing it among the top tier of global ecommerce apps. However, as tariffs tighten across countries and compliance costs rise, its lighter platform model and ultra-low-price strategy are approaching their limits.
       
      
   7. The challenges Temu faces are similar to those Shein and Pinduoduo encountered in their early years: product quality is uneven, and while consumers recognize the low prices, they do not fully trust the quality. In China, Pinduoduo had a large pool of suppliers and was able to gradually win consumer trust through its 10-billion-yuan subsidy programme and strict penalties to filter suppliers. But the number of cross border suppliers are relatively limited, so Temu has to control more of the process to ensure product quality. Xinpinmu may be the first step in that direction.
       
      
   8. Overseas consumers can already feel that Temu has become more expensive. The number of products priced below US$10 have dropped sharply, while those priced above US$20 have increased significantly. On one hand, the platform is selling better-quality products; on the other, the U.S. and other markets have removed cross-border duty-free treatment for low-value parcels. This forced suppliers to stock and ship goods from overseas, increasing logistics costs. A person close to Pinduoduo said Xinpinmu could further extend into mid-range consumption.
       
   9. Quality the Pinduoduo way: Xinpinmu has begun to intervene in the production process in a way similar to Shein, but it still follows Pinduoduo’s usual approach: with incentive systems and rules that allow as many suppliers as possible to compete, with the stronger ones surviving and the weaker ones being eliminated, while the platform itself does not step in directly.Unlike Shein, Xinpinmu will not send teams to factories to supervise production, improve processes, or train workers. e.Instead, it controls quality in two ways: by screening suppliers before they join, and by penalising them later if quality problems emerge.
       
      
   10. Xinpinmu aims to shift Temu’s previously fragmented, lightweight supply model, which relied on direct shipping of small parcels, toward larger orders, more certain inventory, and more controllable product quality.
        
       
   11. Pinduoduo’s main-site growth took place in China, a market with well-developed infrastructure, abundant supply, and extremely cheap logistics. In contrast, Xinpinmu faces more fragmented overseas markets, more complex tariffs and compliance requirements, and heavier inventory risks.
       

It is a necessary investment for Temu’s continued development, not another new venture, at least not yet.

For the fuller picture of how Temu got here, read Momentum Works’ earlier reports Who is Temu? and Temu: 2 years on.