China’s e-commerce giants were spooked by Temu-owner PDD last year. Now the upstart has almost doubled its annual profits

PDD reported quarterly revenue that was more than double the same period the year before. Revenue for the quarter ending Dec. 31, 2023, reached 88.8 billion yuan ($12.3 billion), 123% more than the same quarter in 2022. It made a quarterly net profit of 22.4 billion yuan ($3.1 billion), up 146% from a year ago.

The e-commerce platform did just as well on a full-year basis. Total revenue for 2023 increased to 247.6 billion yuan ($34.4 billion,) 90% higher than the previous year. Net income rose 93% to hit 58.7 billion yuan ($8.2 billion).

In an earnings statement, Lei Chen, co-CEO of PDD Holdings, called 2023 a “pivotal chapter in our corporate history,” as Pinduoduo withstood a sluggish Chinese economy to take a larger share of the country’s e-commerce market, and as budget platform Temu’s popularity surged in the U.S.

Pinduoduo’s cheaper products are winning over more value-conscious consumers as China’s economy goes through a confidence crisis.

Temu launched in the U.S. in September 2022 and has since expanded into Europe and Southeast Asia. Its knockdown prices, which lets you “Shop Like a Billionaire”, is helping the platform challenge established players like Amazon, Walmart, and Target. Temu has also spent big on advertising to promote its brand on platforms like Google, Meta, and the Super Bowl.

PDD’s big play for the U.S. could be expensive: Analysts say Temu is burning cash to break into the U.S. e-commerce market. PDD does not separate its Chinese and international businesses in its earnings.

But Temu’s tactics have come to the attention of U.S. lawmakers who said there’s an “extremely high risk” that products on the platform have been made with forced labor. Temu’s cheaper offerings have also led to lawmakers calling on the Biden administration to crack down on the number of packages from China that enter the country duty-free. U.S. trade law allows packages bound for consumers to enter tariff-free; the current threshold is $800 per person per day.

PDD is worrying China’s tech executives too. Last November, Alibaba founder Jack Ma urged employees to “correct” the company’s course, and praised PDD’s ability to capture market share. JD.com Richard Liu also recently urged workers not to “lie flat” amid greater competition.