PDD: Facing Trouble on Multiple Fronts

PDD Holdings, the parent company of Temu, is under intense scrutiny from both China and the European Union.

China's Investigation

The State Administration for Market Regulation (SAMR) is investigating claims of fake deliveries. SAMR is a powerful regulator with the authority to delve deeply into PDD's business practices.

Physical Confrontation

In Shanghai, employees reportedly fought with SAMR investigators. Several people were arrested, further complicating PDD's relationship with the regulator.

Europe's Concerns

Temu's headquarters in Dublin were raided by EU authorities. The EU is concerned about unfair advantages stemming from Chinese subsidies, which may give Temu an edge over local businesses.

Broader Implications

This is significant as more Chinese companies look to Europe to avoid US trade issues.

Impact on PDD

PDD is losing trust in key markets, including China, which is crucial for their operations. They need to repair relationships with governments to prevent further escalation.

Potential Solutions

PDD may need to adjust their strategy by:

• Adding more local sellers
• Improving logistics

These steps could help calm critics and mitigate the impact of new regulations.