- Premium Content It takes our newsroom weeks - if not months - to investigate and produce stories for our premium content. You can’t find them anywhere else.
Peter Cowan · · 3 min readTracking PDD’s Temu-fueled rise to surpass Alibaba in market value
Simon Huang contributed to this article.
When you think about ecommerce in China, you probably think of Alibaba. The Jack Ma-founded company has long been the top player in its home country, but those days may be numbered.
Last month, rival PDD Holdings, the company behind Pinduoduo and Temu, surpassed Alibaba in market capitalization, making it China’s most valuable ecommerce firm.
As the chart above shows, Alibaba’s market cap fell steeply, dropping from a high of US$795.4 billion in the third quarter of 2020 to about US$192.1 billion as of January 3. PDD outstripped its older rival with its US$199.3 billion figure.
Tale of two companies
The struggles of Alibaba and its founder have been well-documented. The halting of Ant Financial’s IPO, an antitrust investigation, scrapped plans for an IPO of its cloud business, and leadership changes have all hurt its value.
PDD, on the other hand, has enjoyed solid growth. Its US-based unit, Temu, soared to the top of app download charts in the US and made a big splash with a Super Bowl commercial earlier this year.
About 9% of Americans have shopped on Temu, Chinese publication LatePost reported.
So what’s behind this changing of the guard?
PDD’s success at bringing the Pinduoduo playbook abroad with Temu may be part of the appeal for investors. The firm has also recorded rising revenue figures, up 94% year on year in Q3 of 2023.
In contrast, Alibaba’s takings were only up by 9% for the year.
The comparison becomes even more stark if you look at revenue from just Alibaba’s ecommerce businesses (its China and international operations), excluding numbers from other divisions like cloud, logistics, and digital media and entertainment.
In the fourth quarter of 2021, Pinduoduo’s revenue was only 14% of Alibaba’s ecommerce revenue. By the most recent quarter, this had increased to 56%.
Chinese consumers, however, don’t appear ready to abandon Alibaba altogether.
First, the company’s ecommerce revenue is still nearly twice that of Pinduoduo’s.
Second, the net promoter scores (NPS) for the two brands in China show that Alibaba still has a sterling reputation.
Takeaways for SEA’s ecommerce brands
Stay ahead in Asia’s tech landscape
This is premium content. Subscribe to read the full story.
We look at what’s behind this changing of the guard.
We know this is not ideal. ⌛ Sign up in 20 seconds. Cancel anytime.
Our subscriber community includes professionals from these companies:
Stay updated on the go with our mobile app.
Get latest insights with smoother, more personalized experience through TIA mobile app.
