PDD Holdings Inc's
Temu and Shein played an integral role as rivals of Jack Ma co-founded Chinese e-commerce juggernaut Alibaba Group Holding Limited
Shein, based in Singapore, cut ties with several suppliers in southern China due to violations of the company's certification standards, discovered by auditors last year.
These suppliers have now turned to Temu, aggressively targeting Shein's market share by investing billions to ship low-cost goods from China to Western consumers, the Financial Times reports.
Shein, known for its efficient supply chain management that appeals to Gen Z shoppers with its low prices, is preparing for an initial U.S. public offering, contingent on approval from Beijing.
The company's scrutiny of its supply chain highlighted that many manufacturers did not meet its specified requirements, leading to a shift where smaller factories, unable to supply Shein directly, began partnering with Temu.
Unlike Shein, Temu does not impose factory size requirements on its sellers, broadening its supplier base.
This strategic move by Temu offers items ranging from $4 laptop bags to $9 car tyres, forcing factories to compete on price, potentially reducing their profit margins.
Despite this, Temu provides these suppliers an alternative route to offload excess stock, challenging Shein's dominance.
Additionally, Temu is expanding its strategy to compete more directly with giants like Amazon.Com Inc
This aggressive expansion and competitive pricing strategy have prompted Amazon to seek lower-priced products from its suppliers.
Price Action: PDD shares traded lower by 1.87% at $129.11 on the last check Tuesday.
