General

Faced with the attack of JD's "ten billion subsidies" since the end of February, Pinduoduo has made a new move in its overseas business in the domestic market. According to the latest news, Pinduoduo's cross-border e-commerce business will officially enter Australia and New Zealand on March 13, and continue to promote the direct connection of China's manufacturing industry to Australia and the global market. The institution pointed out that under the background of the peak of domestic flow dividend, e-commerce going to sea will be an important second growth curve for domestic e-commerce platforms.

Overseas dominance, rapid expansion

Last September, Pinduoduoduo officially launched the cross-border e-commerce platform TEMU in North America. Since its launch, TEMU has achieved full coverage of domestic manufacturing categories, and has successively promoted tens of thousands of manufacturing enterprises such as clothing, digital, home appliances, luggage, outdoor, accessories, toys, stationery, etc. to successfully go to sea. At present, the hot selling products such as women's clothing and small household appliances on the TEMU platform have achieved a daily sales of 10000 single items and more than 30000 single stores. Huacheng Import and Export Data Observation Report.

Unlike the domestic agent e-commerce model, TEMU is a nanny-like self-operated platform overseas. That is, TEMU is responsible for commodity pricing, marketing, customer acquisition, contract execution (service provided by the partner) and other links. As a supplier, the merchant only needs to prepare goods to the warehouse. The platform eventually earns the purchase and sales price difference and bears the costs of customer acquisition, contract execution and other costs.

The online outbound Pinduoduoduo Cross-border E-commerce Investment Promotion Guide (hereinafter referred to as "the Guide") shows: "Merchants who enter the Pinduoduo Cross-border Platform do not need to pay any fees, zero yuan for entry, and zero commission." The Guide also specifically states: "Facing the North American market, businesses do not need complex operation procedures, and can confirm the selection and price with the corresponding investment promotion bartender."

However, unlike domestic proprietary platforms, which are generally "expensive", such proprietary platforms as TEMU well continue the user mentality of Pinduoduo's "extreme cost performance". Some businesses that have tried to operate the TEMU platform said that products with lower prices are easier to pass the platform review; Another merchant said that the price of clothing goods should be 10% - 20% lower than the price of Alibaba 1688 to make it easier to pass the review.

The strategy of "extreme cost performance" really worked. TEMU has also been popular with overseas consumers since its launch. As of February 23, 2023, TEMU has dominated the App Store shopping list and Google Play shopping list for 69 days and 114 days respectively, with more than 40 million new downloads, becoming a new platform and channel for Chinese manufacturing industry to directly connect overseas consumers. The last APP that can dominate the list with similar posture is SHEIN.

It is worth mentioning that four months after the launch of TEMU, the expansion plan was put on the agenda. In addition to the planned comprehensive launch of the North American market earlier, TEMU opened the Canadian site in early February this year; By the beginning of March, the news of TEMU's entry into Australia and New Zealand had been confirmed, and Huacheng's import and export data observation reported.

People close to Pinduoduo believe that this is very consistent with Pinduoduo's "character". Previously, it took Pinduoduoduo only two years and 11 months from its establishment in September 2015 to its landing on NASDAQ, setting a new record for the fastest listing of Chinese Internet companies. Now Pinduoduo obviously wants to replicate this speed overseas.

"In order to help China's manufacturing industry sell to the world in one stop, after TEMU officially landed in Australia, domestic manufacturing products that have been launched in the North American market will also enter the Australian market at the same time." The relevant person in charge of Pinduoduoduo cross-border e-commerce business said that during the preparation of the Australian market, Pinduoduo will also continue to fully open to domestic manufacturing brand merchants, small and medium-sized enterprises, and source factories, and provide 0 commission to the settled merchants 0 Preferential policies for deposits, as well as a package of support policies such as flow support and resource subsidies.

The person in charge also said that, in order to better serve enterprises and businesses, Pinduoduo cross-border e-commerce will provide comprehensive infrastructure services for manufacturing enterprises at sea, including domestic and foreign warehousing, cross-border logistics and after-sales services, to open up a "full link" cross-border channel for manufacturing enterprises, Huacheng Import and Export Data Observation Report.

Policy support, just at the right time to go to sea

On March 6, JD launched the "10 billion subsidy" to launch the price war of domestic e-commerce, which means that the competition of domestic e-commerce is becoming increasingly fierce. At the same time, the Central Economic Work Conference proposed the policy support of "encouraging platform enterprises to show their skills in international competition". Under multiple background factors, going to sea has become an important second growth curve for major e-commerce enterprises.

The reporter combed and found that in the field of e-commerce, in addition to being the highest-rated SHIEN and TEMU, several major domestic giants had already made a layout. In December 2022, Alibaba once again attracted a lot of attention due to its third capital injection into the Southeast Asian e-commerce platform Lazada. Since the acquisition of Lazada in 2016, Alibaba has been "blood transfusion" to it. According to incomplete statistics, the total amount of relevant funds has reached about 4.8 billion US dollars so far.

Not long before TEMU went online, ByteDance's overseas fast fashion independent station IfYooulanded in the European market. Before that, ByteDance also launched independent station Dmonstudio and independent e-commerce app Fanno. In addition, TikTok, a subsidiary of ByteDance, began to test the live broadcast of e-commerce business TikTok Shop in Indonesia in 2021, and continued to accelerate the pace of expansion.

Relying on its own supply chain advantages, JD focuses on more "important" links such as logistics warehouse allocation. Up to now, JD has nearly 100 bonded warehouses, direct mail warehouses and overseas warehouses around the world, and its supply chain services cover nearly 230 countries and regions around the world.

Even Tencent, which has always been ridiculed as "without e-commerce gene", has made early layout and invested in Sea, the parent company of Shope, an e-commerce platform. In June 2022, Tencent bought the shares of Flipkart for US $263 million, which is currently the largest B2C e-commerce platform in India, known as "Amazon of India", and Huacheng Import and Export Data Observation Report.

It is worth mentioning that since this year, the global economic and trade situation has become extremely severe. The weakening of foreign demand and the decline of orders have become the main contradiction in China's foreign trade. A series of policies have also been issued throughout the country to support foreign trade enterprises to seize orders and expand markets.

For example, in February this year, the Ministry of Finance, the General Administration of Customs and the State Administration of Taxation jointly issued the Announcement on the Tax Policy for the Export Return Goods of Cross-border E-commerce, which exempted the import tariff, import value-added tax and consumption tax on the export return goods of cross-border e-commerce that meet the requirements, and allowed the export tariff already collected at the time of export to be refunded. Zhang Zhouping, senior analyst of the B2B and cross-border e-commerce department of the Economic and Social Research Center of the Internet, analyzed that the introduction of this policy has saved the cost of return for cross-border e-commerce export enterprises, reduced the worries of enterprises, and will also inject confidence into the development of cross-border e-commerce industry.

"In particular, cross-border big sellers such as Anke, Zebao, Banggu, Youkeshu, Cross-border Tong, Tongtuo, Saiwei, Zibuyu, Sanxing, Aoji, Zhiou, and Yibai have a greater demand for return because of the large volume of overseas stock. The policy fully considers the demands and interests of cross-border e-commerce enterprises, promotes the improvement of China's cross-border e-commerce import and export tax policy, and also promotes the rapid development of the export cross-border e-commerce industry." Zhang Zhouping said.

As the platform side, Pinduoduoduo, after officially launching cross-border e-commerce business last year, tailored the "2022+Seagoing Support Plan" for domestic manufacturing enterprises, aiming to give full play to the digital advantages of the platform, provide manufacturing enterprises with full-link digital services from product structure, design and development, production and manufacturing, brand building and other aspects, and help Chinese manufacturing enterprises achieve transformation and upgrading in the process of going to sea, Further enhance international competitiveness.

"Starting in March this year, the special team of the Duoduo Overseas Support Plan will successively go to 100 high-quality industrial belts in China, including Guangdong, Fujian, Zhejiang, Jiangsu, Shandong, Hebei, Anhui, Shaanxi, Sichuan and Hubei, to comprehensively promote manufacturing enterprises to expand overseas markets, accelerate digital transformation and upgrading, and better participate in international competition." said the relevant person in charge of Pinduo cross-border e-commerce business.

CITIC Securities pointed out that with strong policy support and complete supporting service system, China's cross-border e-commerce market share is expected to continue to grow, and the scale of China's cross-border e-commerce market is expected to reach 2.95 trillion yuan in 2024, and its share in the global e-commerce market (excluding China) is expected to increase from 8.6% in 2021 to 13.1%. Based on the successful practice of the mature e-commerce model in China, we are optimistic about the capacity output of the domestic head platform based on its own advantages and the potential valuation increment for the company. Huacheng Import and Export Data Observation Report.