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InnovationDaily Drip

E-Commerce App Pinduoduo Accused of Reviving “Knock-Off China” Image [Updated]

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As Pinduoduo employees in Shanghai and New York celebrated the group deal app’s listing on the Nasdaq last week, a host of online commentators were sharpening their knives.

The firm’s stock price soared upon its market debut and capped a remarkable rise that began just three years ago and has seen the bargain-sharing “social e-commerce” platform worry the dominant forces of Alibaba and Jingdong, despite the fact it still hasn’t turned a profit. But to some, Pinduoduo’s listing in the US was an embarrassment and undid years of hard work aimed at moving beyond China’s image as the knock-off capital of the world.

All you need to know about Pinduoduo’s rise:

How a Cut-Price Upstart Took on Alibaba and JD to Become China’s Fastest-Growing E-Commerce Platform

In a widely-circulated WeChat article, Dawei Weng accused the company of “overturning 20 years of history” thanks to its alleged proliferation of fakes and knock-off goods. Screenshots have been flying around on Weibo with all manner of dodgy products discovered on Pinduoduo and users have been falling over themselves to say how embarrassed they feel about the company being seen as representative of China.

A Weibo user on shoddy products sold on Pinduoduo

As one commentator wryly noted in reference to China recycling much of the Western world’s refuse until recently: “China has finally found a way for the US to import its trash with the listing of Pinduoduo”.

Some went for a more visual representation:

A GIF doing the rounds on Chinese social media showing a razor “bought on Pinduoduo”

At one point — in a brilliantly meta knock-off move — it even seemed that a fake Pinduoduo app had appeared on Apple’s App Store:

On Sunday night, Wang Xing — head honcho at Meituan and a recent entrant onto Fortune‘s 40 Under 40 list — offered a defence of sorts when he argued that “all these people criticizing Pinduoduo and not criticizing Alibaba (which is where this started from) shows how forgetful our society is.”

But on Monday, Pinduoduo’s troubles continued with TV maker Skyworth publicly demanding that they remove a series of listings they said infringed on their IP rights and accusing the platform of hosting counterfeit versions of their sets.

Skyworth’s notice to Pinduoduo

The company’s share price jumped 44% on its market debut last week, instantly making founder Zheng Huang a millionaire. Yet even with a loyal “lower tier” fanbase, Pinduoduo’s PR problems may have put an early stop to any celebrations.

Update: Pinduoduo have gone on the defensive, reportedly telling STCN that they’ve removed 10.7 million fake goods from their platform in the past year and intercepted 40 million links leading to fraudulent services or products. They also say they’ve been working closely with around 400 brands to seek out counterfeit items and have set up a 150 million RMB consumer insurance fund.

Meanwhile, a spokesperson told various media that, “counterfeiting isn’t just one company’s problem; from the supply chain to the sales side, we all need to beat out fake products, then counterfeit products will be fewer and fewer.” 

Zheng Huang, for his part, held a press conference on Tuesday, during which he stated that the problem of fakes “was actually smaller than the media might imagine”, though he conceded that Pinduoduo could do better in tackling the issue.

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