Why could Pinduoduo go public in the US?https://news.cgtn.com/news/3d3d774e33416a4d79457a6333566d54/img/010774f8517640a7a9808c0fbe29f8e1/010774f8517640a7a9808c0fbe29f8e1.jpg
(China Plus) Pinduoduo (PDD), the fast-growing Chinese online group buying site – known for combining steep discounts with social media – is under regulatory investigation over alleged counterfeit goods and intellectual property infringements after facing longstanding criticism of hosting fake goods on its platform.
China’s State Administration for Market Regulation (SAMR) has asked regulators in Shanghai, where the online group discounter is headquartered, to investigate the company over counterfeit products, a move announced on its website on Wednesday. It said it will deal seriously with any illegal practices found on the platform.
https://news.cgtn.com/news/3d3d774e33416a4d79457a6333566d54/img/d59e275c5e04488ab3dfd2d44f21a349/d59e275c5e04488ab3dfd2d44f21a349.jpg SAMR announced it will investigate PDD over counterfeit goods on its website on Wednesday. /Screenshot via Wechat
The decision comes as several brands have increasingly spoken up about the company, which recently raised about 1.6 billion US dollars in a New York IPO, for hosting fake goods pretending to be well-known or legitimate brands sold at hefty discounts.
One of the brands, Skyworth, a Chinese audiovisual equipment manufacturer, had demanded PDD to remove knockoff products from the platform in a statement. In its case, many fake goods were spotted to bear names which resemble Chuang Wei (the brand’s Chinese name), with only slight variations, or alternative Chinese characters that are hard to notice on a screen, according to a picture posted on Skyworth's official Sina Weibo account. https://news.cgtn.com/news/3d3d774e33416a4d79457a6333566d54/img/fc314a189fba4bebbe62e41db0bc1624/fc314a189fba4bebbe62e41db0bc1624.jpg Skyworth demanded PDD remove counterfeit Skyworth-branded products from its platform in a statement. /Screenshot via Weibo
Other brands, have also have found “doppelganger” knockoffs on PDD’s platform on sale for a steep discount.For example, Chinese smartphone maker Vivo said it had found products named Vivi. In a recent statement, it said it’s discussing the problem internally before taking any steps. https://news.cgtn.com/news/3d3d774e33416a4d79457a6333566d54/img/3363e1f6c61446388fed7e855148bd6e/3363e1f6c61446388fed7e855148bd6e.jpg Vivi, a fake Vivo-branded phone was found on sale for about 400 yuan (about 60 US dollars) on PDD. /Screenshot via Weibo
Meanwhile netizens noticed a Samsung knockoff called Shaasuivg. https://news.cgtn.com/news/3d3d774e33416a4d79457a6333566d54/img/a4d981aba42f4053a9749d81de8ae2d7/a4d981aba42f4053a9749d81de8ae2d7.jpg Similar discounted pricing for TV products, which appears to be a Samsung knockoff can be found. /Screenshot via Weibo
And a number of diaper products named Puobanrs, Parmebos, and even Pampermes were found to replicate the brand Pampers. https://news.cgtn.com/news/3d3d774e33416a4d79457a6333566d54/img/9f30824e626f4072a8deb89ac3fe51bf/9f30824e626f4072a8deb89ac3fe51bf.jpg Pampers-branded products are seen with similar names. /Screenshot via Weibo
In its latest response, PDD said it has taken measures to fight counterfeits, and will work with regulators to further tackle its fake goods. https://news.cgtn.com/news/3d3d774e33416a4d79457a6333566d54/img/833031207f9f47c1b53b4dc3fd4d58c6/833031207f9f47c1b53b4dc3fd4d58c6.jpg PDD said it will work with authorities to take measures against counterfeit goods in a statement. /Screenshot via Weibo
With a myriad of products ranging from groceries and fast fashion, to gadgets and knickknacks, often being sold at discounted prices, Pinduoduo’s methodology has appealed to people in China’s lower-tier cities. PDD shoppers are often older, more price-sensitive or just love cheaper goods despite being middle class, according to Tao Yuan, CGTN reporter.
So, how is the site able to sell items at such a steep discount?
A combination of group buying and social networking, Tao reported.
PDD wants users to involve their friends in the shopping process – whip up enough friends on social media to buy together (which is highly likely thanks to the ubiquity of China’s do-everything social mobile app WeChat), then the group gets a discount, she added.
This phenomenon could be described as "a combination of Costco and Disneyland”– a “fun shopping with friends” experience, according to PDD’s founder Colin Huang in a letter to shareholders.