Temu receives endorsement from China’s official news agency

Temu, the global arm of PDD holdings, seems to have received an endorsement from China’s official Xinhua news agency. 

The article, entitled “From 0 to 70: The Journey of Cross-Border E-commerce Platform Temu’s Global Expansion” was published on 18 October on Xinhua’s news platforms, as well as other news outlets syndicating Xinhua’s content. The article is part of a series of 20 articles called “The Observation of China’s Economic Samples: Enterprises”, which features companies mostly in the high tech space including China Electronics Engineering Design Institute, Changsha Intelligent Driving Institute, Weichai Group and Huasun Solar. A few consumer focused businesses, including a poultry group, and regional supermarket chain Pangdonglai,  are also featured. 

According to a friend who used to work at Xinhua, the way the article is positioned signifies that it is a story that was planned at a higher level, not procured by Xinhua journalists on their own or pitched by Temu’s PR department. 

Here is a quick summary of the article in bullet points form. You can read the original article on Xinhua’s news site (use your web browser’s translation tool, which is usually good enough, if you do not read Chinese). 

• • • Temu’s Expansion: Launched by Pinduoduo in September 2022 in the US, Temu has expanded to over 70 countries and regions, attracting millions of downloads from overseas consumers.
    • Connecting Manufacturers and Consumers: Temu connects thousands of small and medium-sized manufacturers in China with global consumers, helping them tap into overseas demand while offering cost-effective Chinese products to international buyers.
    • Challenges of Global Expansion: Temu faced obstacles such as differing policies in various regions, intense competition in the e-commerce sector, and the need to balance relationships between suppliers, consumers, and the platform.
    • Competitive Advantage: Temu leverages Pinduoduo’s extensive domestic supply chain network and applies social commerce strategies to attract customers in North America with discounts, cash-back offers, and promotions.
    • Growth in the US: Temu became the top app in North America in terms of downloads and user growth, introducing Chinese goods directly to consumers at competitive prices amid rising inflation.
    • Full-Service Support for Merchants: Temu offers a “full-consignment” service model for merchants, lowering barriers to global trade by handling logistics, sales, and distribution for them.
    • Support for SMEs: Many SMEs benefit from Temu’s market insights and supply chain expertise, which help them adapt products for international markets and scale their businesses.
    • Balancing Price and Quality: While Temu offers affordable products, it faces criticism for varying product quality. The platform is working on improving product standards and ensuring long-term growth through better governance and support for merchants.
    • New Operational Models: Temu introduced a “semi-managed” service model that allows merchants more control over pricing and shipping, while still benefiting from the platform’s global reach.
    • Future Focus: To maintain sustainable growth, Temu is focused on improving the platform ecosystem, building trust with consumers and merchants, and reinforcing its competitive strengths in global markets.

Founded in 1931, Xinhua News Agency is a ministerial level institution under the State Council a.k.a. the Central People’s Government.

We don’t know whether the content planners at Xinhua decided to pick a role model for cross border ecommerce and Temu fits the bill more than any other company, or Temu is indeed favoured by the officialdom. However, such an article would certainly alleviate some of the investor fears about the company since its office was stormed by disgruntled suppliers in the middle of the year. 

In the last earnings call, PDD’s management also pledged to subsidise good suppliers more in an effort to support “new productive forces”. Many investors interpret that as the company’s refusal to distribute its vast profits to shareholders, one of the reasons why the share prices plunged 30% after the earnings call. 

We do think there is much more behind the simple narratives.