This commentary first appeared on ChannelNewsAsia (CNA). Republished here with permission. You can access the other commentaries from Jianggan Li on CNA as well. 

Advertisements for Temu, an online marketplace owned by Chinese e-commerce group PDD Holdings, appeared again at the Super Bowl this year – the most watched sports event in the United States.

Temu is among a new generation of Chinese players disrupting the e-commerce landscape in Western markets. After making its US debut in September 2022, it is available in 56 countries as of March, including our neighbours Malaysia and the Philippines. The platform generates US$2 billion in sales each month, a figure that is growing.

Other notable Chinese e-commerce companies now are SHEIN, which is now seeking an initial public offering (IPO) of up to US$90 billion, and TikTok Shop, which major sellers told us clocked more than US$30 million in US sales on Black Friday last November.

An investor from the West remarked to me that AliExpress and Shopee have not been able to disrupt the position of Amazon – but new Chinese companies keep coming anyway, from SHEIN to TikTok Shop and Temu.

What are the driving factors behind the stream of Chinese e-commerce players into Western markets? Are the newer companies different from their older peers such as AliExpress? Will increasingly difficult China-US geopolitics affect their fortunes?


With the largest manufacturing base for consumer goods globally, cross-border e-commerce from China to the West is not new.

In the late 2000s, Chinese companies such as SHEIN, LightInTheBox and Globalegrow, started leveraging online credit card payments and cheap logistics via postal services to sell goods directly to consumers in the West.

The reasons were simple: Good margins, easy to ship, and bidding for ads on Google was cheap. These players later evolved into marketplaces or large independent online retailers.

Many other Chinese sellers leveraged Western platforms such as Amazon Global and eBay’s Global Buying Hub to sell their wares in Western markets. Chinese e-commerce leader Alibaba also launched its global platform AliExpress in 2010.

Investors told us that 40 to 50 per cent of Amazon’s US$490 million third-party sales in 2022 came from Chinese sellers, either selling cross-border or through their registered entities and warehouses in the US.

Global, regional and country platforms have been enlisting Chinese sellers to expand the assortment of competitively priced products. Amazon, eBay, Shopee, Wish, Uruguay-based MercadoLibre and Poland’s Allegro run large seller onboarding and engagement teams in China.

However, many of these Chinese e-commerce companies have struggled lately. LightInTheBox’s share price dropped more than 90 per cent since its IPO, and Globalegrow shut down in 2021 and was declared bankrupt by court in 2023.

On the other hand, the trio of new players TikTok Shop and Temu, as well as revamped SHEIN, have been surging ahead, disrupting the global e-commerce order. What’s special about them?


One key difference: Most old-generation firms simply played the game of offering an abundance of goods and using online advertising to acquire customers. Over the years, customer acquisition has become more expensive, and customers have become more demanding about product quality and service.

TikTok Shop, Temu and SHEIN, however, are different each in its own way, capturing a key piece of the value chain.

TikTok Shop leverages TikTok’s large, sticky user base. TikTok now has close to 2 billion monthly active users globally, 150 million of whom are in the US – close to half of the US population. TikTok Shop does not have to spend a cent to acquire customers when it can convert TikTok’s users into e-commerce users.

Temu, on the other hand, has operated a “full consignment” model. It sells goods from third-party suppliers to consumers without owning the goods, saving on inventory and working capital. This has allowed Temu to offer a large variety of products at low costs for consumers.

Both TikTok Shop and Temu have polished their business models extensively through their sister operations in China’s domestic market – Douyin and Pinduoduo respectively.

Both have also disrupted the e-commerce market order in China. We estimate that Alibaba’s market share in e-commerce in China has reduced from 80 per cent to 48 per cent over the last seven years, while Pinduoduo and Douyin have collectively taken 30 per cent of the market.

SHEIN, on the other hand, has always been a pure cross-border player focused on fashion. Unlike its peers which concentrated on marketing and growth, in the late 2010s SHEIN put all its bets on integrating and digitising its supply chains.

This allows SHEIN to have a design-to-consumer cycle of less than two weeks, and to add thousands of new products to its store every day.

Each of the trio has acquired and leveraged a specialty for growth. When Pinduoduo first emerged in China, incumbents such as Alibaba and JD looked down on it for selling cheap and unbranded goods. In November 2023, PDD’s market cap briefly overtook that of Alibaba.

Alibaba is now taking the competition very seriously, a key factor that prompted the group’s largest restructuring in history last year. Alibaba is also replicating Temu’s full consignment model for its AliExpress and Lazada platforms.

While it is uncertain whether they will pull off the same trick in Western markets because of differences in timing and circumstances, incumbents such as Amazon should take the same caution that Alibaba and JD should have in the mid-2010s.

File photo. A man walks past the Alibaba booth during the first China International Supply Chain Expo (CISCE) in Beijing, China on Nov 28, 2023.(Photo: Reuters/Florence Lo)


An external risk for the trio though, is geopolitics and the potential political and policy consequences.

There have been calls from Western stakeholders to investigate Temu and SHEIN for issues ranging from forced labour and consumer data privacy. Political pressure on TikTok is ramping up, with the US House of Representatives passing a Bill that may lead to a nationwide ban on the app.

Such pressure might intensify and become unpredictable should former US president Donald Trump win this November’s presidential election.

It is hard for anyone to predict how things will turn. However, these companies are run by smart people who adapt fast. TikTok has learnt from dealings during the previous Trump administration, as well as the TikTok Shop ban in Indonesia, while Temu’s top management has installed themselves in Boston instead of Shanghai.

They will navigate choppy waters but one thing is for sure: In an age of elevated interest rates and inflation, the ability to supply middle-class Americans with cheap clothes and household items is something that politicians will be very careful not to disrupt.


Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at [email protected].


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Jianggan Li is the Founder & CEO of Momentum Works. Prior to founding Momentum Works, he co-founded Easy Taxi in Asia, and served as Managing Director of Foodpanda. The two years running Rocket Internet companies has given him a lifetime experience on supersonic implementation, and good camaraderie with entrepreneurs across the developing world. He holds a MBA from INSEAD (GMAT 770) and a degree in Computer Engineering from Nanyang Technological University. Unfortunately he never wrote a single line of code professionally - but in his first job he was in media, travelling extensively across Asia & Europe, speaking with Ministers & (occasionally) Prime Ministers. Apart from English and his native Mandarin, he is also fluent in French and conversational in Cantonese & Spanish. He tried to learn Latin (for three years) and Sanskrit (for six months) as well. In his (scarce) free time, he reads, travels, hikes and dives. Pyongyang, Tehran & Chisinau are among the interesting cities he has been to.