Despite hints of government financial support, specific plans remain unclear. China has been in deflation for five quarters, threatening economic growth. The government has focused on supporting manufacturing, but surplus goods have kept prices low. Pinduoduo, which focuses on online shopping, has a strong influence on lowering prices in the country. About 60% of consumers choose to shop through e-commerce. Counteracting this effect, other major companies such as Alibaba and JD.com have also started cutting prices to compete with Pinduoduo. Pinduoduo founder Colin Huang believes that the company offers products that are perceived as cheap by buyers, even if they are not.
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However, this leads to increased competition in the market and lower margins for sellers. Many of them say that economic conditions make it difficult to do business. However, buyers remain loyal to Pinduoduo due to its low prices, making it difficult for merchants to leave the platform despite the difficulties. As such, Pinduoduo’s influence on the Chinese economy is becoming increasingly significant, and its operating model continues to deepen the country’s deflationary tendencies.
