The company’s strong performance across its key business segments highlights its successful strategic initiatives and robust market presence.

Strategic Initiatives and Business Review

PDD Holdings has demonstrated strong strategic execution, significantly enhancing its value proposition in the digital commerce landscape.

The company’s commitment to high-quality development, emphasized by its leadership team, has been pivotal in driving growth across various sectors including gaming, digital content, advertising, and FinTech.

With a focus on improving the overall consumer experience and strengthening supply chain capabilities, PDD Holdings has seen significant traction in its strategic initiatives.

In Q1 2024, the company reported a total revenue of RMB86,812.1 million (US$12,023.3 million), a dramatic increase from RMB37,637.1 million in the same quarter of 2023. This growth was fueled by a 56% rise in revenues from online marketing services and a 327% surge in transaction services.

Financial Highlights

PDD Holdings’ financial performance in Q1 2024 was marked by several key achievements:

• Total Revenues: The company reported total revenues of RMB86,812.1 million (US$12,023.3 million), representing a 131% year-over-year increase.
• Operating Profit: Operating profit soared to RMB25,973.7 million (US$3,597.3 million), up 275% from the previous year’s RMB6,929.0 million.
• Net Income: Net income attributable to ordinary shareholders reached RMB27,997.8 million (US$3,877.7 million), a 246% increase from RMB8,101.0 million in Q1 2023.
• Non-GAAP Metrics: Non-GAAP operating profit and net income also saw significant growth, with non-GAAP operating profit at RMB28,552.2 million (US$3,954.4 million) and non-GAAP net income at RMB30,601.8 million (US$4,238.3 million).

PDD Holdings’ Q1 2024 results underscore the company’s robust growth trajectory and strategic focus on long-term value creation.

With a strong financial performance and continued investment in high-quality development, PDD Holdings is well-positioned to capitalize on future opportunities. As the company deepens its strategic initiatives and enhances its service offerings, stakeholders can expect sustained growth and innovation in the coming quarters.

The Greater Bay Area is home to more top brands than any other region in China with 134 brands represented in the ranking.

The banking sector dominates with 85 brands accounting for 22% of total brand value in ranking, with ICBC once again crowned China’s most valuable brand.

Leading fight against health emergency, pharma sector sees greatest brand value increase, up staggering 123%. Leading the way as the sector’s most valuable brand is Sinopharm, which has recorded a 58% brand value increase to US$3.2 billion.

Retail is the second most valuable sector – with 17 brands featuring and accounting for 10% of the total brand value – and also the second-fastest-growing sector, recording a cumulative brand value growth of 54%.

The top four Chinese e-commerce brands – Taobao, Tmall, Alibaba.com, and JD.com – have all seen significant brand value growth. Taobao (brand value US$53.3 billion) and Tmall (brand value US$49.2 billion) have entered the top 10 for the first time following 44% and 60% brand value increases, respectively.

Alibaba.com’s brand value has been boosted by 108% to US$39.2 billion, simultaneously propelling the brand from 22nd to 13th – a result of a huge spike in demand. JD.com enjoyed an 82% brand value increase to US$23.5 billion, following a 30% rise in its annual shopper count.

Pinduoduo is the fastest growing brand in China, up 148% to US$6.3 billion and jumping 60 places in the ranking to 63rd. Read about Pinduoduo’s road to brand upgrade.

Perseverance of brands in investment and infrastructure development pays off – solid performances across real estate and engineering & construction sectors.

Media sector surges 33%.

• WeChat is China’s and the world’s strongest brand with a top score of 95.4 out of 100 and AAA+ brand strength rating.
• TikTok/Douyin (brand value US$18.7 billion), has taken the 24th spot as the highest new entrant.
• Bilibili up 106% to US$1.9 billion

Top 500 Chinese Brands in 2021

Members can download the list here (Excel; annual and CIW Premium subscribers).

Top Global Brands 2021

US and Chinese brands account for two-thirds of the total brand value of the world’s 500 most valuable brands, according to the latest report by Brand Finance – a brand valuation consultancy.

US brands boast a cumulative brand value of a staggering US$3.3 trillion, equating to 46% of the total brand value in the ranking. Chinese brands’ total brand value is US$1.4 trillion, equating to 20%.

Apple has overtaken Amazon and Google to reclaim the title of the world’s most valuable brand for the first time since 2016 with an impressive 87% brand value increase to US$263.4 billion and.

• Tesla leaves traditional auto marques behind with the fastest brand value growth in ranking, up 158%
  CBS is the fasting-falling brand in ranking, down 49%
• Airline and aerospace sectors account for 6 out of 10 fastest-falling brands in the ranking
• Hospitality suffers from travel and dining restrictions, as Marriott and Airbnb check out from ranking and Starbucks, McDonald’s, and KFC see brand values drop
• Mastercard’s Ajay Banga best among top 100 CEOs in Brand Finance Brand Guardianship Index 2021

Top 100 best Chinese brands, led by Alibaba and Tencent

The seven countries included in the report by United Nations Conference on Trade and Development (UNCTD) are Australia, Canada, China, South Korea, Singapore, UK, and the U.S. China and the U.S. lead the global retail market with total sales of $5,681 billion and $5,638 billion respectively in 2020.

China also has the largest online retail sales of US$1,414.3 billion in 2020, followed by the U.S. with $791.7 billion.

Also read: Top e-commerce mobile shopping platforms in China 2021

China’s online sales accounted for 24.9% of the total retail market. South Korea’s online share is the highest of 25.9%.

UNCTD’s report also identified the top 13 B2C e-commerce companies by GMV, led by Alibaba, Amazon, JD, Pinduoduo, Shopify, eBay, and Meituan.

Among the top 13 companies, the ones with the highest growth in 2020 are Shopify, Walmart, and Pinduoduo.

CIW members can download the report here (CIW Standard annual billing and all CIW Premium subscribers).

Social e-commerce Pinduoduo’s road to brand upgrade

Consumers can buy iPhones, Huawei mobile phones, Nike sports shoes, and Lancome skincare products on Pinduoduo. However, all these brands did not accept its proposal to open brand flagship stores.

Most brands still sell in the name of dealers, or refuse to participate in the “10 billion yuan subsidy”, or only provide low-end products. They keep a distance from Pinduoduo and regard it as an online factory outlet store.

An outlet store, factory outlet or factory shop is a brick and mortar or online store in which manufacturers sell their stock directly to the public.

Winning more brands has become one of the most important tasks of Pinduoduo this year. Pinduoduo has listed the proportion of brand GMV as the focus of this year’s work, according to LatePost.

Before the government agency issued the fine to Alibaba, Pinduoduo’s related brand investment promotion activities have been accelerated.

Pinduoduo provides traffic support to cooperative brands, including promotion activities such as “super brand day” and “ten thousand people group”. In addition, it also newly designed the “official” or “flagship store” gold logo to distinguish it from the “brand” black logo of the dealer store.

Relying on WeChat traffic bonus, low price goods, and good user experience, Pinduoduo enables users in low tier cities and those who did not use e-commerce before to buy things online. In this process, the 9.9 yuan box of fruit and the counterfeit products news placed the label “cheap” on Pinduoduo brand.

Taobao and JD have become the backbone of consumption in China today. In the past year, the number of Pinduoduo buyers has exceeded Taobao/Tmall and JD, but the people who grew up with Taobao and JD have not trusted it as much.

The “10 billion yuan subsidy” that went online in the second quarter of 2019 tried to alleviate the problem.

It also really drove the growth of platform sales and users very quickly. In 2020, the per capita consumption of its buyers has increased from 1551 yuan to 2115 yuan at the end of 2020, but this figure is less than 1/3 of JD and 1/4 of Alibaba.

The participation of 10 billion subsidies mainly included the second and third level distributors of the brand, which could not improve the trust of users on Pinduoduo. Pinduoduo marketing activities also focused on highlighting products rather than stores.

The available brand products categories are relatively limited, which restricts the frequency of consumers’ shopping and the average purchase order value.

This is why Pinduoduo has now accelerated the persuasion of the brand side to open official stores: not only to eliminate the doubts about the quality of goods, but also to have enough profit space to promote, and to sell advertisements to the brand merchants with abundant financial resources.

Internal Competition

By the middle of 2020, Pinduoduo’s total investment in merchant recruitment team had exceeded 400 people.

Based on product categories, they are divided into a brand merchant recruitment team and an industrial belt merchant recruitment team. At the beginning of 2020, Pinduoduo set up an industry-wide brand recruitment team with 30 people to attract large brands.

The 30 people team was divided into two groups to compete against each other. They do not share any data or resources with each, and team members are required to compete for brands everywhere.

The competition is extremely fierce. The performance of the two groups was assessed monthly, including the number of brand stores, GMV, and GMV growth rate.

“Two groups of people will not look up to say hello when they meet.”, according to LatePost. Sometimes the two groups approached the same brand to talk about store launch, and they didn’t know each other.

In addition to the internal competition, Pinduoduo also conducts a variety of A/B testing on the product end to observe which merchant presentation form is more attractive to consumers.

In Pinduoduo’s brand store suffix, there are “brand” black label, “official” and “flagship store” gold label, and “flagship store” label. Among them, the gold label is the official flagship store, while “brand” black label and “flagship store” label are usually dealer stores.

Showing or hiding different labels are part of Pinduoduo team’s A/B testing.

Brands’ concern on pricing control

Not all brands accept the sales strategy of trading more for lower price, especially those international brands which have built multi-level distribution system and stable profit sharing.

Pinduoduo’s discount may destroy their original pricing system and affect dealers who need to pay store rent and staff salary. Pinduoduo hoped that the brand side would also participate in the 10 billion subsidy, but some refused.

In this regard, Pinduoduo has made limited compromises and agreed not to label their listings with “10 billion subsidy” and to issue consumption vouchers instead to achieve a discount.
For those brands willing to participate, Pinduoduo also relaxed some restrictions.

Previously, it had asked businesses to make special packaging materials for “10 billion subsidy”, printing Pinduoduo’s logo and QR code on the package with brochures inside explaining “10 billion subsidy” to highlight Pinduoduo’s own brand.

Nowadays, the restriction of this kind of special packaging is no longer compulsory.

Adidas is the biggest brand in the recent round of official brands launch on Pinduoduo, and it is also the company that Pinduoduo gives the most resources; the banner of “Adidas official launch” is placed on not only the top of the “my order – to be received” page.

Adidas received a lot of support from Pinduoduo but it launched its presence as an outlet store on Pinduoduo. Its daily GMV is by far below expectation.

If Pinduoduo wants to attract brands to open stores and sell to consumers directly through its platform, so as to change consumers’ impression of this platform, for a period of time, it can only accept the positioning of the online version of outlet store – a special, low-cost, but limited variety of authentic shopping mall.

The number of brands and merchants on Tmall Global grew 60%

This year, the total operating revenues of the 500 listed Chinese companies reached 50.5 trillion yuan, an increase of 11% over the previous year; and the net profit reached 4.2 trillion yuan, an increase of more than 16% compared with last year.

The annual revenue threshold of listed Chinese companies on Fortune 500 list this year is close to 17.8 billion yuan, which is nearly 10% higher than that of last year. Last year, China’s GDP exceeded 99 trillion yuan, which means that the total income of the 500 listed companies on the list is still more than half of China’s GDP in that year.

The top three companies in this year’s Fortune 500 list have not changed, with Sinopec, PetroChina and China State Construction Engineering (CSCEC).

Ping An Insurance of China ranks fourth and still ranks first among non-state-owned enterprises. Jingdong (JD.com) and Alibaba, two “Internet service and retail” enterprises, both ranked higher. Among them, JD rose to 13th place and Alibaba ranked 18th.

From the industry point of view, with the gradual profitability of some top Internet service companies, the net profit created by the industry on the list increased by more than 300% year-on-year.

2019 is the first year of “new infrastructure”, but because of its relatively low absolute proportion in fixed assets investment, “old infrastructure” still plays an indispensable role.

The total revenue of infrastructure, construction, power, construction machinery, port and logistics related industries in the Fortune 500 list of China’s “traditional infrastructure” reached 8.6 trillion yuan, 17.7% higher than the previous year’s 7.4 trillion yuan. This industry is still one of the important pillars of stable economic growth.

This year, there are 39 new and re-listed companies on Fortune China 500, of which Pinduoduo is on the list for the first time and ranks 321st with total revenue of 30.1 billion yuan.

Another new company worth mentioning in the Internet field is Joyy. This company, which mainly deals in live game broadcasting, is also on the list for the first time, and ranks 359th on the list with revenue of about 25.6 billion yuan.

In addition, the newly listed companies also include Grandjoy Holdings Group, which is engaged in real estate investment and management, and the “king of smartphones in Africa” Transsion.

In terms of profitability, the situation is the same as the previous year. In addition to several major commercial banks and insurance companies, the top 10 companies by net income are still Alibaba Group Holding Co., Ltd., China Mobile Co., Ltd. and Tencent Holding Co., Ltd.

The total profits of the ten companies last year were about 1.7 trillion yuan, nearly 40% of the total profits of the top 500 companies.

In 2019, 15 listed companies in Fortune 500 failed to make profits, with a total loss of about 80.7 billion yuan. Qinghai Salt Lake Industry Co., Ltd. ranks first in the loss list, with a loss of more than 45.8 billion yuan. iQiyi, the second-largest-loss company, lost 10.3 billion yuan.

Pinduoduo, which competes for users in the first and second-tier cities with low commodity prices, has a loss of more than 6.9 billion yuan in 2019, ranking third in the loss list.

Among all the listed companies, the real estate industry accounts for 4 of the top 10 companies with the highest ROE. Among them, Yanlord Land Group Co., Ltd. has an ROE of 43.5%. Netease was second by ROE. The agriculture, forestry, animal husbandry, and food and beverage industries have three seats in the Top Companies by ROE list, which are:

• Foshan Haitian seasoning Food Co., Ltd.
• Wenshi Food Group Co., Ltd.
• Guizhou Maotai Liquor Co., Ltd.

If you have CIW Premium subscription, visit this page for the full data including Chinese company name, revenues, and net income to copy or download in your preferred format.

Top 500 Companies in China

Huang Zheng, an ex-Googler and the founder of the Pinduoduo, has just resigned as CEO. Chen Lei, the former CTO of the company, is taking over the post of CEO.

Mr. Chen is one of the founding members of the Company and has served as Chief Technology Officer of the Company since 2016. Prior to joining the Company, Mr. Chen served as Chief Technology Officer of Xinyoudi Studio since 2011. He received his bachelor’s degree in computer science from Tsinghua University and his doctoral degree in computer science from the University of Wisconsin-Madison.

Huang Zheng continues to be the chairman of the board. At the same time, Huang Zheng’s shareholding ratio in Pinduoduo has been reduced to 29.4% from 43.3% in April 2020, according to SEC. Accordingly, Huang Zheng’s voting rights decreased from 88.4% to 80.7%.

“The management changes will place us on an even stronger footing to strive for the next level,” said Mr. Zheng Huang, Chairman of Pinduoduo. “Chen Lei has been instrumental to Pinduoduo’s growth since its inception. With him taking on the role of CEO, I have every confidence that Pinduoduo will be able to take on more responsibility to create value for society.”

On his own role, Mr. Huang said: “I will remain Chairman and be closely involved in working with the Board and management to formulate the company’s longer-term strategy.”

Commenting on his appointment to Chief Executive Officer, Mr. Chen Lei said: “Pinduoduo has grown very fast because we were able to meet the unmet needs of many Chinese consumers. I am honored and humbled to take on the role of CEO of Pinduoduo and look forward to working with the rest of our management team and colleagues to make Pinduoduo an even better corporate citizen and contribute more to society.”

Concurrently, Mr. Jianchong Zhu has been appointed as General Counsel, and Mr. Jing Ma as Vice President of Finance, both with immediate effect.

Mr. Zhu has served as Senior Vice President of the Company since 2018. Prior to joining the Company, Mr. Zhu was a partner in the Beijing office of White & Case LLP.

From 2010 to 2017, he was an Associate and then Counsel in Skadden, Arps, Slate, Meagher & Flom LLP. Mr. Zhu received his bachelor’s degree in English language and literature from Tsinghua University and his Juris doctor’s degree from University of California Hastings College of the Law.

Prior to joining the Company, Mr. Ma had 17 years of finance-related experience in the Chanel group. At Chanel, Mr. Ma held a number of roles, including most recently the corporate director of Chanel China Company Limited, the chief financial officer of Chanel Hong Kong Limited and Chanel Macau Limitada, and the regional treasurer of Chanel Limited (Regional Headquarter) responsible for all treasury matters across Greater China and APAC countries.

Mr. Ma received his bachelor’s degree in chrematistics from Shanghai University of Finance & Economics, his MBA degree from Fudan University and his EMBA degree from China European International Business School.

Top mobile shopping platforms in China: Taobao, Pinduoduo, JD

Mogujie is a very popular mobile shopping app among women in China with 2.43 million active users in March 2020 while Jumei app has 1.16 million MAU.

For those not familiar with these apps. Here is a quick introduction.

• Mogujie (MOGU INC) is a social media and e-commerce platform specializing in fashion content, products, and services. Headquartered in Hangzhou, China, Mogu was founded in 2011 by former Alibaba engineer Chen Qi, along with Xue Yuqiang and Wei Yibo.
• Jumei is an online cosmetic shopping platform focused on make-up and skin-care brands
• Meilishuo is a Pinterest-like website that enables women to find personalized clothing and skincare products.
• Youzijie is a technology company focused on mini programs for retail and e-commerce

Check out the different female age groups below for their favorite mobile shopping platforms:

Pinduoduo made it to the top 5 across three out of the four age groups while Tmall made to two.

Top mobile shopping platforms in China: Taobao, Pinduoduo, JD

Pinduoduo’s total revenues in Q1 2020 were 6,541.1 million yuan (US$923.8 million), an increase of 44% from 4,545.2 million yuan in Q1 2019.

Its average monthly active users in the quarter were 487.4 million, an increase of 68% from 289.7 million in Q1 2019.

The number of active buyers in the twelve-month period ended March 31, 2020 were 628.1 million, an increase of 42% from 443.3 million in the twelve-month period ended March 31, 2019.

Annual spending per active buyer in the twelve-month period ended March 31, 2020 was 1,842.4 yuan (US$260.2), an increase of 47% from 1,257.3 yuan in the twelve-month period ended March 31, 2019.

Pinduoduo was able to ship on average 50 million daily orders in March to meet its users’ needs.

Pinduoduo Financial Results in Q1 2020

Total revenues were 6,541.1 million yuan (US$923.8 million), an increase of 44% from 4,545.2 million yuan in Q1 2019. The increase was primarily due to an increase in revenues from online marketing services.

Revenues from online marketing services were 5,492.3 million yuan (US$775.7 million), an increase of 39% from 3,948.4 million yuan in Q1 2019.

Revenues from transaction services were 1,048.8 million yuan (US$148.1 million), an increase of 76% from 596.8 million yuan in Q1 2019.

Total costs of revenues were 1,830.2 million yuan (US$258.5 million), an increase of 110% from 873.3 million yuan in Q1 2019. The increase was mainly due to higher costs for cloud services, call center and merchant support services.

Total operating expenses were 9,108.0 million yuan (US$1,286.3 million), compared with 5,792.4 million yuan in Q1 2019.

Sales and marketing expenses were 7,296.6 million yuan (US$1,030.5 million), an increase of 49% from 4,889.3 million yuan in Q1 2019, mainly due to an increase in advertising expenses and promotion and coupon expenses.

General and administrative expenses were 338.3 million yuan (US$47.8 million), an increase of 43% from 236.1 million yuan in Q1 2019, primarily due to an increase in headcount.

Research and development expenses were 1,473.2 million yuan (US$208.0 million), an increase of 121% from 667.1 million yuan in Q1 2019. The increase was primarily due to an increase in headcount and the recruitment of more experienced R&D personnel and an increase in R&D-related cloud services expenses.

Operating loss was 4,397.2 million yuan (US$621.0 million), compared with operating loss of 2,120.5 million in Q1 2019. Non-GAAP operating loss6was 3,587.9 million yuan (US$506.7 million), compared with operating loss of 1,621.9 million yuan in Q1 2019.

Net loss attributable to ordinary shareholders was 4,119.3 million yuan (US$581.8 million), compared with 1,877.7 million in Q1 2019. Non-GAAP net loss attributable to ordinary shareholders was 3,169.6 million yuan (US$447.6 million), compared with 1,379.1 million in Q1 2019.

Basic and diluted net loss per ADS were 3.54 yuan (US$0.50), compared with 1.64 in Q1 2019. Non-GAAP basic and diluted net loss per ADS were 2.73 yuan (US$0.39), compared with 1.20 in Q1 2019.

Net cash used in operating activities was 567.1 million yuan (US$80.1 million), compared with 1,543.3 million yuan in Q1 2019, primarily due to an increase in online marketing services revenues.

Cash, cash equivalents, restricted cash and short-term investments were 69.5 billion yuan (US$9.8 billion) as of March 31, 2020, compared with 68.6 billion yuan as of December 31, 2019.

Compare with JD.com Q1 highlights

The CBs will have a coupon rate of 5% per annum and a tenure of three years, with an option to extend by two years at the election of PDD, according to a statement by GOME. The CBs are convertible at HK$1.215 per share, which works out to approximately 1.28 billion GOME shares or approximately 5.6% on a fully diluted basis.

“This strategic partnership is a win-win-win,” said Mr. David Liu, Vice President of Strategy at PDD. “Consumers win because they get a wider range of top domestic and international brands at competitive prices, GOME wins because they can broaden their access to our 585.2 million users, and PDD wins because we enhance our foothold in household appliances and electronics.”

The tie-up marks the first strategic investment by Pinduoduo and comes after its US$1.1 billion share placement to long-term investors in March, when it said it will use the proceeds to enhance user experience.

The partnership also strengthens the e-commerce platform’s position in household appliances and electronics while accelerating its push into consumer-led manufacturing.

As part of the partnership, PDD will help bring the entire GOME product range, including top domestic and international brands such as Siemens, Sony, Haier, Gree and Midea, onto Pinduoduo platform at competitive prices.

PDD will also help GOME’s digitization strategy, extending PDD’s technological capability to help the retailer upgrade its supply chain and tailor its product range to consumer needs and preferences.

GOME will integrate its logistics, delivery and assembly services with the PDD platform to enhance user satisfaction.

With GOME’s extensive network of stores across China, PDD users will be able to enjoy an extension of their user experience to try and experience the products before placing their orders.

The deal also furthers PDD’s push into the consumer-to-manufacturer (C2M) realm by working with GOME to source for products that are tailored to customers’ needs.

Founded in 2015, the Shanghai-based company has seen rapid growth as it builds on its strength in all product categories, including household appliances and electronics.

Pinduoduo exceeded RMB 1 trillion (US$144.6 billion) in GMV for the 12-month period ended December 31, 2019. The company saw a 40% increase in active buyers in the same period to 585.2 million, while annual spending per active buyer jumped 53%.

Alibaba launched a new app Taobao Special Offer in March 2020 to compete with Pinduoduo on C2M.

Pinduoduo and Taobao’s manufacturing strategies