In the new decade, Pinduoduo will spend heavily on long-termism.

Is Pinduoduo a long-term oriented company?

The executives gave a positive answer. On the night when the Q2 financial report was released, Zhao Jiazhen, co-founder of Pinduoduo, said: "This year marks the starting year of Pinduoduo's second decade, and it is also a crucial year after I took over as chairman to launch the overall reshaping of the company's organization and culture centered on 'high-quality development in the new decade'."

This is not empty talk. Let's take a look at what Pinduoduo has done in the past few quarters: actively promoting platform governance, continuously increasing investment in the "Hundreds of Billions Support" initiative, and its cross-border business Temu quickly adjusted its strategy to adapt to the brand-new global trade environment.

To this end, Pinduoduo did not hesitate to make painful trade-offs, putting pressure on its profits. In Q2, Pinduoduo's total revenue reached 1,123.58 billion yuan, a year-on-year increase of 8%; however, the net profit attributable to ordinary shareholders decreased by 12% year-on-year. But this did not shake its determination to continue investing at all. Its R&D expenses in Q2 increased by 40% year-on-year, and the growth rate of operating expenses was also significantly higher than the revenue growth rate.

In response, Zhao Jiazhen explained at the earnings call that the decline in profits was mainly due to a series of continuous investments in the platform and the industrial ecosystem, which affected the performance of this quarter to a certain extent.

Obviously, this leading e-commerce player that has been known for "daring to invest and daring to take losses" since its founding is making a new choice.

01

Pinduoduo's Self-Purification: Normalized Platform Governance

The current macro consumption environment is complex, and the growth logic of the e-commerce industry has also changed greatly. To promote the "high-quality development in the new decade", the platform has allocated more funds and resources to multiple long-term strategies such as platform governance.

Since it proposed to focus on platform governance, Pinduoduo has launched more than 150 trust and security measures in total, with over 50 special initiatives launched only in June, covering product listing control, food and drug safety, qualification review, advertising compliance, intellectual property rights, misleading marketing and live e-commerce specifications.

Among many categories, food sold online is one of the key categories that the platform has focused on recently. On June 5, Pinduoduo released the "Special Governance Announcement on Geographical Indication Products on the Platform", reminding merchants that if there are violations such as non-compliant product qualifications, non-standard filling of product attributes, false publicity, the platform will take corresponding disposal measures.

Dong Jian, a producing-area merchant with the "Luochuan Apple" geographical indication authorization, told the media that this is actually one of the platform's measures to support high-quality merchants, allowing honest merchants who focus on quality and supply chain efficiency to obtain more market opportunities and profit margins.

Obviously, in order to quickly solve the chaos in some industry categories, Pinduoduo's governance team has carried out targeted special governance one by one according to the characteristics of vertical categories, and only in June, more than 50 special plans for segmented fields were implemented. Zhao Jiazhen said at the earnings call: "We insist on building a solid compliance bottom line with institutional rigidity, reconstruct governance logic with systematic thinking, promote ecological governance to advance in depth towards normalization, refinement and institutionalization, and effectively create a safer, more standardized and more trustworthy consumption environment."

Many merchants told the media that with the implementation of new regulations such as the "Measures for the Supervision and Administration of Online Trading Platform Rules" and the "Provisions on the Supervision and Administration of Operators of Online Food Sales to Implement the Main Responsibility for Food Safety", they clearly felt that "the platform has stricter control and higher requirements, and at the same time, the explanation of the rules and the guidance for merchants are also more detailed."

Pinduoduo has intensified its governance efforts in all dimensions. Since the beginning of this year, focusing on key areas such as merchant business qualification review, food safety, AI services and applications, minor protection, and intellectual property protection, Pinduoduo has continued to promote the normalization of ecological governance, consolidate the compliance foundation from the source, actively fulfill platform responsibilities, and effectively protect the rights and interests of consumers.

After the merchant submits the qualification for the operation license of geographical indication products, the relevant information will be displayed on the product details page

In addition to launching special governance measures for vertical categories, Pinduoduo has also expanded the scope of governance. Pinduoduo not only supervises "whether there is a problem with the product", but also covers the whole chain of pre-sales, in-sales and after-sales of products, and governs the whole set of behaviors of merchants and products before and after platform transactions.

In order to optimize the business environment, in addition to promulgating new regulations and various supervision and management measures, Pinduoduo has also made a lot of investment in technology to ensure the implementation and execution of the rules. Recently, Pinduoduo set up a special company in Xiongan. The latest data shows that the company's full-time employees have reached 4,000, and it has launched the traditional industry data processing service center and the comprehensive service center for high-quality development of traditional manufacturing.

Zhao Jiazhen revealed: "Since settling in Xiongan, with the determination of long-term investment, we have continued to increase support and investment in the Xiongan company, and make heavy investment in the Xiongan company from multiple dimensions such as fixed asset investment, special talent recruitment, and core business implementation."

02

E-commerce Needs New Growth, High-quality Supply Should Take the Center Stage

In the e-commerce industry where competition has become a red ocean, how can we continue to achieve growth? Pinduoduo's answer is high-quality supply.

Since the beginning of this year, Pinduoduo's "Hundreds of Billions Support" policy for benefiting merchants has maintained high investment, and it has iteratively upgraded special actions such as "Pinduoduo High-quality Local Specialties", "New Quality Supply" and "E-commerce Westward Expansion". Specifically, the scope of Pinduoduo's hundreds of billions of support has extended from merchants to agricultural production areas, industrial belts and their upstream and downstream, promoting the comprehensive upgrading of the supply chain system.

Taking agricultural products such as Guangdong litchi and Hainan pineapple as examples, guided by the platform, origin merchants will introduce a "traceability code" for each order of fruit, so that consumers can scan the code to view key quality data such as origin, shipper, quarantine information and inspection reports. Products that used to rely on merchant descriptions have become quality information that consumers can further verify.

In order to help merchants grow, the platform also provides extremely high traffic support, and traffic products such as flash sales, 10,000-person group purchases, and 10 Billion Subsidies are further tilted to high-quality products in agricultural production areas and industrial belts, making many seasonal fruits hit big sellers on Internet platforms.

The platform gives the center stage to high-quality supply, not just traffic support. According to the executives, the goal of supply chain investment should be: "Not only to stock up goods, but also to build good roads."

First of all, we need to "stock up goods". Pinduoduo has continued to help capable traditional OEMs improve their product and brand capabilities through projects such as "New Quality Supply" and "Pinduoduo High-quality Local Specialties", promote the value leap of the supply side, and allow consumers to obtain high-quality domestic products with higher cost-effectiveness.

In addition, Pinduoduo is continuously improving the performance chain: improving the transit network through infrastructure projects such as free shipping to villages, breaking the logistics end breakpoints in remote areas, so that consumers in more regions can enjoy the convenience and benefits brought by e-commerce.

After the courier delivering parcels to the village unloads the parcels for the village, he collects the parcels to be sent by the villagers along the way

Zhao Jiazhen said bluntly: "As the industry matures, each platform will choose different paths based on its own capabilities and accumulation. For us, the path has always been very clear: continue to build a solid supply chain."

In order to deeply understand the pain points and demands of merchants, Pinduoduo's various special teams have also gone deep into the front line of the industry to provide systematic support for merchants. According to reports from many media, in many industrial belts across the country, the "New Quality Supply" special team has successively entered industrial belts such as Suzhou home textiles, Shaoxing tents, Jinhua outdoor products, Guangzhou beauty products, Jieyang men's clothing, and Xinyang textiles, providing systematic support for merchants in industrial belts from dimensions such as traffic exposure, data empowerment, market expansion, cost reduction, intelligent manufacturing and warehouse upgrading.

After a year of efforts, Pinduoduo's "Hundreds of Billions Support" merchant strategy is gradually entering the harvest period from the investment period.

From the 10 billion yuan fee reduction in 2024 to the hundreds of billions of support launched at the beginning of last year, the platform's resource tilt and supply chain feedback in the past two years have covered major agricultural production areas and manufacturing industrial belts. A number of merchants in industrial belts have achieved quality and efficiency leaps with this support.

These achievements can be seen not only from the words of merchants, but also in the financial report. Judging from various important data, Pinduoduo's performance in Q2 has stabilized. In this quarter, Pinduoduo's transaction service revenue reached 54.7 billion yuan, a year-on-year increase of 13%, and the growth rate far exceeded the overall revenue level; the online marketing revenue representing the revenue of the domestic main site increased by 3.5% year-on-year, which was an improvement over the 2.5% year-on-year growth in Q1, significantly higher than the previous negative growth forecasts of Citi and Goldman Sachs; the adjusted operating profit in Q2 increased by 5% year-on-year, higher than the expectations of Goldman Sachs/Citi (-4%/-9%).

Zhao Jiazhen said: "These implementation cases prove that the supply chain feedback measures are effective. The primary goal of the plan is to improve product quality, supply chain and merchant ecology, so that small and medium-sized merchants can invest the saved costs in product upgrading. In the long run, the decline in merchant operating costs, profit recovery, and enhanced business confidence will eventually drive the continuous growth of the platform's endogenous value."

03

Great Changes in Global Trade, Temu Shows a New Look

Looking through the financial reports of many companies, we can see that unprecedented changes are taking place in cross-border e-commerce. Changes in regulations and policies have rewritten the rules, and redefined what kind of products are really needed by the global consumer market at present and in the future.

In the past few years, the business model of cross-border e-commerce was very simple: the platform obtained profit margins by reducing procurement costs, advertising costs and logistics costs. However, the gradual improvement of compliance requirements has impacted the old model, changed the past game rules, and cross-border e-commerce players have all taken new steps to turn to new models.

Chen Lei admitted frankly that after the new policy is implemented, cross-border orders in the EU market will face problems such as reduced fulfillment efficiency and rising operating costs, and the short-term growth of related businesses will be significantly impacted.

This is also related to the fact that Temu is already in a different development stage. Today, Temu is already a leading player in cross-border e-commerce, and its user data once caught up with Amazon, the world's largest e-commerce platform. Its growth has been relatively stable, and its business strategy should also be adjusted appropriately. Reducing advertising investment and shifting the business focus to improving per-order benefit and user retention is a logical move.

Building trust has become the most important thing at present. What cross-border e-commerce needs to do is no longer to export the excess supply chain caused by the epidemic, but to make up for a whole set of new business capabilities, including local warehouses, after-sales service, brand marketing, KOL product recommendation, content evaluation, affiliate channels, media exposure, and even some overseas offline activities.

Based on this, Pinduoduo launched its self-operated business Xinpinmu, and launched the brand BEMUVO, which has been launched in countries such as Japan and Canada. At present, users can find the brand store by searching "Bemuvo" on the homepage of the Temu App or website, and the products are directly supplied by the official brand. At present, the products are mainly standard products such as household goods and clothing, many of which are co-branded products with IP (such as Batman, The Powerpuff Girls, etc.), with a wide price range, from keychains less than 2 US dollars to quilt cover sets of 26 US dollars, continuing Pinduoduo's consistent style of "good products at affordable prices".

At the earnings call, the executive said that Xinpinmu is still in the early stage of development, and no proportion target for self-operated and third-party businesses has been given, nor has the pricing caliber been given. In addition, the self-operated brand is currently positioned as an extension of long-term investment in the supply chain — working closely with manufacturers who have the ability and willingness to invest in product development for a long time, and using the platform's market insight and global reach to provide certainty for brand building. At the execution level, we will first selectively focus on the core categories where the platform and supply chain have unique advantages, and cooperate with manufacturers for a long time from product planning, R&D to quality standards and market testing.

To run self-operated business, investment in infrastructure is indispensable. Temu is undergoing a major strategic transformation, accelerating the shift from the past model of "full hosting + direct mail from China" to the model of "semi-hosting + local overseas warehouses".

Temu is vigorously building overseas warehouses: it has launched more than ten self-operated warehouses in Europe (such as Germany and Poland) at the same time, and is advancing the self-built warehouse project in the United States. The platform's goal is to increase the proportion of goods shipped from local warehouses at European sites to a relatively high level in the third quarter of 2026.

In order to cope with the new trends in cross-border intellectual property rights, in July this year, Temu released the "2026 Intellectual Property Protection Report", fully disclosing the annual intellectual property governance achievements. The report shows that in the past year, Temu has deeply improved the full-link intellectual property risk control system, built a three-level review mechanism of "machine intelligent review + manual fine recheck + brand party joint verification", realizing full-cycle risk control before product listing, during sales and after-sales.

A legal professional analyzed to the media that in order to cope with the new policy, Temu is likely to come up with a set of global compliance upgrading plans, including setting up a compliance center in Europe, introducing third-party product testing institutions, establishing stricter seller access standards, and at the same time changing some full-hosting categories to semi-hosting, returning the pricing power and after-sales responsibility to merchants partially, so as to prove that it is only a platform rather than a retailer. But these actions take time, and 13 days is obviously not enough for implementation. It is more likely to first submit a roadmap and budget that can be accepted by the EU.

Facing the new international trade environment, Chen Lei, Chairman of Pinduoduo, said: The company's business is related to the daily life of billions of people around the world, and there is huge room for growth, accompanied by higher responsibility expectations. Chen Lei said that the platform has built systematic intellectual property protection capabilities. Recently, we have achieved a full victory in intellectual property litigation cases with our peers, which also confirms that this set of intellectual property protection mechanisms is effective.

In short, the tax reform policies in Europe and the United States are forcing cross-border e-commerce to optimize supply and embark on