Included in social e-commerce company Pinduoduoโs annual report released Wednesday was a letter from its founder and CEO Huang Zheng which sought to reassure shareholders about the companyโs recent troubles including continuing allegations of peddling counterfeit goods.
Pinduoduo, Huang said, is like โwhen Yao Ming just started in elementary school. He might have been quite tall, but was nevertheless only an elementary school student,โ referring to the platformโs outsize success despite only being four years old.
The company, Huang added, like Chinaโs most famous professional basketball player, โneeds adequate nutrition, appropriate training, and life experiencesโ as it contends with getting โpushed onto the court to compete head-to-head with adult players.โ
Huang also appeared to make a plea for understanding when it came to the companyโs investment decisions. โIt is probably not a good idea to put our money โin the piggy bankโ into a fixed deposit at this stage,โ he added.
Pinduoduo shares fell 2% following the report, closing at $23.94 on Wednesday. Its market value was around $27.6 billion after going public in New York last year, around 65% of JD.com ($42.9 billion) and one-twentieth the size of Alibaba ($481.29 billion).
The already intense online retail rivalry between Pinduoduo and the countryโs dominant player, Alibaba, is heating up. The Chinese e-commerce upstart has voiced concerns beginning late last year that it was contending with monopolistic advantages on the part of Alibaba, which began compelling merchants to choose between the platforms with a โforced exclusivityโ policy.
Third-party merchants were reportedly forced to speak publicly about Pinduoduo as a fake seller and then rewarded with more traffic on Tmall, Alibabaโs proprietary e-marketplace, reported Tencent Tech citing Pinduoduo co-founder Dada as saying. Alibaba denied the claim at the time according to local media, and was not available for comment when contacted by TechNode on Thursday.
Shanghai-based Pinduoduo is struggling to rid itself of its reputation as a counterfeit seller. Chinese media reported previously that Apple asked several distributors to suspend their partnership with Pinduoduo, or risk losing coveted distributor status. The company defended the authenticity of iPhones available on the platform, saying it sourced inventory from Appleโs authorized offline distributors.
โThe current โforced exclusivityโ is likely to persist for some time,โ Huang said, adding that Pinduoduo will continue to invest โproactivelyโ for the long-term value of the company. It recorded RMB 471.6 billion ($68.6 billion) gross merchandise volume (GMV) in 2018, a 234% year-on-year increase from the year prior. However, net losses in 2018 ballooned nearly 20 times to RMB 10.22 billion compared with a year earlier.
