This article first appeared in The Edge Malaysia Weekly on August 24, 2026 - August 30, 2026

FOR Malaysians accustomed to Shopee and Lazada, PDD Holdings Inc may be a less familiar name than its platforms — Pinduoduo and its global budget marketplace Temu. But the Chinese e-commerce group has grown into a major global player by building its business around a simple proposition: Use scale, social commerce and direct links between consumers and merchants to offer goods at exceptionally low prices.

The group traces its roots to Pinduoduo Inc, founded in China in 2015. Its name — Pinduoduo, meaning “put together (拼) more and more (多多)” — reflects the platform’s original team purchase model. Rather than shopping alone, consumers could form teams with friends or other users to purchase products at lower prices, with the larger combined order giving merchants an opportunity to offer better deals.

The strategy helped Pinduoduo rapidly build scale and challenge China’s established e-commerce players.

Just three years after its founding, PDD made its Nasdaq stock market debut on July 26, 2018, raising about US$1.6 billion at US$19 per share and valuing the company at roughly US$24 billion.

Eight years on, its market capitalisation has grown more than fivefold to about US$127.42 billion.

The group subsequently expanded beyond its original platform, launching Temu in 2022 to target overseas consumers. The group changed its corporate parent name from Pinduoduo Inc to PDD Holdings Inc in 2023.

Its Pinduoduo platform has also grown into a major consumer marketplace, with about 750 million active users.

Behind the company is Colin Huang Zheng, a former Google software engineer who had already ventured into e-commerce before founding Pinduoduo.

Born in Hangzhou on Jan 1, 1980, Huang graduated with a master’s degree in computer science from the University of Wisconsin-Madison before joining Google in 2004. He relocated to China in 2006 as part of the team that set up Google China.

In 2007, he founded his first company, Ouku.com, an e-commerce site that sells consumer electronics and mobile phones, which he sold in 2010.

Huang started Leqi in the same year, which helped companies market their presence on websites such as Alibaba Group Holding Ltd’s Taobao or JD.com, before setting up Pinduoduo in 2015.

In the early days, the business focused on fresh produce, particularly fruit, to address China’s fragmented agricultural supply chain. Huang saw an opportunity to bypass layers of distributors and connect farmers more directly with consumers.

Today, the Pinduoduo platform has expanded well beyond fruit and agricultural products, offering a wide range of consumer goods, including everyday household items and apparel, while retaining its focus on competitive pricing.

Huang currently holds no management or board position at PDD after stepping down as CEO in 2020 and later as chairman in 2021.

PDD is now led by co-chairmen and co-CEOs Chen Lei and Zhao Jiazhen.

Still, Huang remains its largest disclosed shareholder with a 24.8% stake in the group, while entities affiliated with Tencent Holdings Ltd held 13.8% as at March 18, 2026. The entities affiliated with PDD Partnership held another 6.5%.

Pinduoduo’s business model is broadly simi­lar to Shopee and Lazada in that it operates primarily as a marketplace rather than a conventional retailer. But its competitive proposition was built around more than simply putting products online.

The model that Pinduoduo developed was built around several mechanisms designed to drive down the cost of getting products from suppliers to consumers.

First, its consumer-to-manufacturer approach. Pinduoduo sought to connect manufacturers, suppliers and farmers more directly with consumers, shortening the traditional distribution chain and reducing reliance on layers of wholesalers and distributors.

Second, group buying. Pinduoduo’s original model encouraged consumers to form purchasing teams to unlock lower prices. By aggregating individual purchases into larger orders, the platform could give merchants greater visibility over demand and allow manufacturers to achieve greater production scale and utilisation. In turn, lower production and distribution costs could be passed on to consumers through lower prices.

Third, social commerce. Pinduoduo integrated social sharing into the shopping experience, allowing users to share product information and team-purchase invitations through social networks such as Weixin and QQ. The prospect of unlocking a lower price gave consumers an incentive to share products with friends, family and social contacts, turning existing users into a source of organic traffic through word-of-mouth referrals and helping the platform acquire new buyers.

The group also spends heavily on sales and marketing to attract and retain users, promote merchants and products, and support its growing ecosystem. In 2025, sales and marketing expenses rose 12.6% to RMB125.3 billion, equivalent to about 29% of its RMB431.9 billion revenue.

Fourth, its asset-light marketplace structure. The company neither owns nor operates its own delivery fleet. Merchants are responsible for sourcing their products and can select third-party logistics providers to fulfil and deliver orders.

This combination — direct access to suppliers, scale, social sharing and price incentives — is central to understanding how Pinduoduo built its low-price proposition.

Meanwhile, Temu, launched in 2022, was positioned as a global brand, offering ultra-low-priced goods shipped directly from Chinese warehouses to consumers in North America, Europe and, eventually, Southeast Asia.

The expansion was aggressive, backed by heavy advertising spend and a supply chain that leveraged China’s vast manufacturing overcapacity. Temu became one of the most downloaded apps in the US within months of its launch.

But the performance was uneven — while Temu gained users quickly in some markets, profitability remained elusive. Regulatory scrutiny in the US and Europe added pressure, and the cost of acquiring customers through subsidies and marketing proved difficult to sustain. Reports suggest that Temu’s losses have weighed on PDD Holdings, prompting a reassessment of how to approach international expansion.

Temu has also faced questions about data security. The app has been linked to a number of cybersecurity concerns in the past, and some users have reported receiving suspicious calls or messages after signing up. Temu has consistently denied any wrongdoing and says it prioritises customer experience and data protection. But the concerns have lingered, particularly among users who are cautious about sharing personal information with platforms based overseas.

PDD generates revenue primarily from transaction and online marketing services. Online marketing revenue comes mainly from merchants paying for product visibility through search, browsing and display advertising, while transaction services revenue comprises fees charged for transaction-related services.

The numbers show just how far PDD has come since its Nasdaq debut.  Revenue grew from RMB13.12 billion in 2018 to RMB393.8 billion in 2024, while the group moved from a net loss of RMB10.3 billion to net income  of RMB112.43 billion over the same period.

However, PDD’s growth engine showed signs of slowing in 2025. Revenue grew 9.65% to RMB431.85 billion, sharply below the 59% growth recorded a year earlier, while net profit fell 13% to RMB97.84 billion. Net profit margin narrowed to 22.7% from 28.5% a year earlier.

PDD’s cash position remained strong. At end-2025, the company held RMB108.9 billion in cash and cash equivalents, rising 88.7% from RMB57.8 billion in 2024. Its cash and cash equivalents consist of cash held in banks. It had no borrowings except for short- and long-term leases totalling RMB5.38 billion.

Its short-term investments stood at RMB313.41 billion as at end-2025.

PDD’s strong balance sheet and profitability have not translated into a premium valuation. As at Aug 22, 2026, the stock was trading at a forward price earnings ratio (PER) of 8.81 times, according to Bloom­berg data, substantially below those of four selected e-commerce peers — Alibaba, eBay Inc, Amazon.com Inc and Sea Ltd.

Unlike pure-play e-commerce platforms such as PDD and eBay, Alibaba, Amazon and Sea are conglomerates with diverse portfolios in cloud, finance, media and gaming.

Among the peers, Sea, which operates Shopee, traded at a forward PER of 32.08 times, followed by Alibaba, whose e-commerce portfolio includes Taobao, Tmall and Lazada, at 18.02 times. Sea is listed on the Singapore Exchange; and Alibaba is listed in Hong Kong. Amazon and eBay, both listed in the US, traded at a PER of 20.47 and 17.06 times res­pectively.

PDD’s market capitalisation stood at US$127.4 billion, with its shares trading at US$89.52 at the time of the comparison.

PDD is favoured by analysts covering the stock, with 32 “buy” recommendations, 15 “hold” calls and two “sell” calls. The consensus target price is US$115.37.

PDD’s strong balance sheet gives it considerable room to continue investing in its international expansion. But whether it can sustain that investment ultimately comes down to profitability.

With PDD not separately disclosing Temu’s profitability or the performance of individual overseas markets, investors should look beyond headline revenue and user growth and examine financial metrics, such as the group’s corporate margins, user engagement costs and regulatory adaptation, economist Professor Dr Yeah Kim Leng tells The Edge.

A warning sign, Yeah says, would be continued revenue growth alongside falling net income, which could point to heavier investment costs, particularly in mature markets where user growth is slowing while advertising costs are rising rapidly.

“Sustainability will hinge on whether its operating margins stabilise, its logistics model proves viable without triggering sharp price increases, and user retention improves enough to justify high upfront costs,” he says.

The Associated Chinese Chamber of Commerce and Industry of Malaysia’s Socio-Economic Research Centre (SERC) executive director Lee Heng Guie concurs that investors should track PDD’s operating and net profit margins, alongside transaction services revenue against gross merchandise volume (GMV).

If transaction-services revenue grows at a slower pace than GMV, it could signal heavier reliance on price-cutting subsidies, Lee says.

PDD did not disclose GMV in its 2025 annual report.

Lee says the profitability pressure is also evident in PDD’s sales and marketing expenses, which rose 12.6% to RMB125.3 billion in 2025, as the group continued to invest in user acquisition and its international platforms. 

Lee says the figures indicate that sustaining aggressive low-price strategies and scaling international platforms are requiring heavier financial outlays and compressing core profitability.

Yet, PDD has considerable financial firepower to absorb those costs.

Yeah says the group’s massive cash reserves and strong operating cash flow provide a deep buffer, even if some overseas markets remain unprofitable.

The financial cushion could allow management to prioritise long-term market share and ecosystem development over short-term profit, giving it the flexibility to outlast competitors and continue its global push and continue investing in supply chain, logistics and user acquisition.

The Edge also reached out to major shareholder Tencent for comment on Pinduoduo’s growth, but the spokesperson said it was unable to disclose information on strategic investments because of company policy and declined to comment further.

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Cover Story 1: Local retailers seek level playing field as Pinduoduo gains ground

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