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Pinduoduo Surpasses in Valuation as Chinese Business Is on the Global Front Burner

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by Christopher Hamman · 3 min read
Pinduoduo Surpasses in Valuation as Chinese Business Is on the Global Front Burner
Photo: Pixabay

Chinese retailer Pinduoduo has just surpassed to become the 4th largest internet company in China.

While this may come as a surprise to many but the less known and less trendy Pinduoduo has overtaken the upscale internet retailer both in share price and valuation. The share price rose on NASDAQ more than 12% to $39.96 giving it a market capitalization of $46 billion ahead of JD’s $45 billion. This makes Pinduoduo the 4th largest internet Chinese company whose shares are listed in another country with Meituan at $65.572 billion, Tencent at $385 billion, Alibaba at $449 billion. This comes after Pinduoduo overtook Baidu in August this year taking the position of the fifth-largest Chinese internet company.

Founded in 2015 and with a budget-oriented target market in mind, the online retailers’ profits grew 170% to $1 Billion while its active shoppers increased 88% to 366 Million last year alone. These rapid numbers, of course, indicate the rise of another trend similar to Alibaba’s hence the speculation among many that Pinduoduo is the new Alibaba in the making.

While both companies have different market segments and different retailing supply chain methods but post similar profit margins, Pinduoduo ‘s focus is on thrift purchasing via group sales rather than the higher-end products at wholesale prices which Alibaba focuses on.

Already, the signals were in the when the retailer surpassed in terms of gross merchandise volume in August this year. According to local sources, CEO Colin Huang in a speech at the company’s anniversary indicated this key metric. What remains unclear however is if the merchandise includes returned goods and those with defects.

The meteoric rise however of Pinduoduo also closely mirrors the rise of different social platforms the world over and a changing of opinions and influence on decisions using technology rather than traditional media, formats, and business structures. The numbers coming from the Chinese internet companies also indicate a rise in online retailing matching a global growth curve as well.

This comes after what has become a pro-technology year for China where all signs point to the world’s second-largest economy placing big bets on technology and in every sense of the word the bets are paying off handsomely.

The recent comments by Chinese President Xi Jinping supporting blockchain technology alongside the return of Bitcoin price from the doldrums show the kind of influence the Chinese have in the world today. It also points to the fact that the Chinese know how to place their markers. The drafting of the cryptography law which was just passed by the politburo was key in steering the Chinese in the direction of blockchain technology alongside the indication of over 500 blockchain projects in the works amongst other high-technology projects tell us that the Chinese haven’t been sleeping but they have been quiet.

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