Threat of trade war limits Temu growth

A sales growth by almost a quarter and a profit growth by almost a fifth: many companies would be ecstatic with such results. Temu is different: the Chinese e-commerce giant sees its growth stagnating and remains below expectations.

Slowest growth in years

Temu owner PDD reported a 24 % increase in sales to 110.61 billion yuan (14.3 billion euros) for the fourth quarter of 2024, falling short of analysts’ expectations of 115.38 billion yuan (14.9 billion euros). The figures point to a stagnating in growth: fourth-quarter sales growth was the lowest since early 2022.

Despite the disappointing sales figures, PDD managed to raise its net profit by 18 % to 27.45 billion yuan (3.6 billion euros). CFO Jun Liu stressed that the group is committed to long-term investments in technology and the platform ecosystem, rather than short-term gains.

Trade war looming

A major obstacle for PDD is the changing world order. With the United States government committed to abolishing or limiting the so-called ‘de minimis’ regulation, which exempts cheap imports such as those from Temu from import duties. An adjustment could significantly harm the platform’s cost structure. The recently increased import tariffs – from 10 to 20 % – also pose a growing threat to the company’s profit margins.

The slowdown also coincides with signs of saturation in the main markets. Although Temu made waves in a short time with extremely low prices, recent data from the United States indicate weakening sales. Competitors such as Alibaba and JD.com seem to be regaining market share; they did exceed analysts’ expectations in the past quarter.