"Chinese e-commerce apps are making a play for the spoils from Americans' favorite hobby: shopping. Affordable prices and clever use of social media have worked wonders for growth.
But profitability might be harder. And political risks are still lurking in the background.
China's Temu has been a smash hit since its launch in September. Discounted prices for a range of products from apparel to electronics are the main draw. The app has been installed 24 million times since its launch, according to estimates by data tracker Sensor Tower.
All this has already been used to great effect in China by Temu's parent PDD -- which owns Chinese e-commerce platform Pinduoduo. Temu will probably account for only a fraction of PDD's total revenue in the near future.
It will also likely be unprofitable as the company is offering generous subsidies and discounts to grow fast.
PDD's China business is profitable now. But it isn't yet clear whether its model will work as well outside China: To succeed, it might need to scale up enormously. Credit Suisse estimated last month that around $3.6 billion of goods could be sold on Temu this year, for an operating loss of $1.7 billion.
Shein, which was founded in China and is now based in Singapore, is another e-commerce wunderkind that has expanded rapidly around the globe in the past couple of years. The fast-fashion company's cheap yet trendy clothes have attracted young buyers, especially during the early years of the pandemic. The app had 172 million downloads last year, according to Sensor Tower.
Both companies have also taken advantage of China's role as the world's factory. A nimble supply chain directly connecting with factories in China has helped lower costs, also enabling the two companies to rapidly adjust to market trends.
Still, there are some obvious challenges -- besides profitability -- on the horizon. Quality control and preventing counterfeiting, while still maintaining cheap prices, could be a problem as both companies continue to scale up.
Worsening U.S.-China relations are another potential risk. Even though selling cheap clothes and gadgets online normally wouldn't catch the attention of politicians barring operational issues such as product-safety problems or fraud, it is hard to say in the current political environment.
China's internet-platform companies have had a rough couple of years at home -- little wonder they are looking abroad. Whether they will truly be able to grow healthily in foreign soil remains to be seen." [1]
Moreover, Landsbergis can jump out and fart. What are you going to do, he is really stupid and bearded village representative.
1. Chinese E-Retail Flourishes On U.S. Soil
Wong, Jacky. Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 28 Feb 2023: B.12.
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