On July 26, 2018, the social e-commerce platform “Pin Duo Duo” officially landed on the NASDAQ. On the opening day, the market value exceeded 30 billion US dollars. In 3 years, 300 million users, more than 200 billion GMV, became the Internet company with the highest market value in Shanghai.

Pinduoduo, boosted by 20-fold oversubscription and high market valuation, confirmed on July 26 to set the IPO price at $19 per ADS. The price hits the top of expected IPO price range, and will allow Pinduoduo to raise around $1.6 billion. The very positive feedback from Pinduoduo’s pre-IPO could have allowed it to raise the IPO price to $22.8 per ADS.

In 2017, the total market value of 13 listed companies in China's home building materials sector was less than 170 billion yuan, far less than the market value of Pinduoduo.

Relying on Tencent's WeChat traffic, Pinduoduo can spread in the circle of friends, targets the Chinese third- and fourth-tier cities consumers who may not know Taobao, Tmall or Jingdong, but they all do have the wechat. Plus, Pinduoduo used a low price strategy to attract a large number of users below the third- and fourth-tier cities, and fully digested this part of the "demographic dividend", accumulating more than 300 million users in less than three years.

Pinduoduo's business model is an online group buying model that buys a certain item at a group purchase price. For example, a piece of clothing is priced at 58 yuan, and it can be purchased by a group of 39 yuan. The user can send the branded product link to the friend, and if the group is unsuccessful, it will be returned. We have seen a lot of people in the circle of friends, each WeChat group has a link with a lot of group purchases, and achieved a fission through social networks.

A Chinese retiree, in her 60s, buys in Pinduoduo plateform a dress for $5 and a pair of shoes—“real leather,” she says—for just $4. She uses WeChat’s mobile wallet to pay for the items. The prices are low because Pinduoduo’s products are often sold by the factories that manufacture them. The marketplace has been accused of hosting unauthorized merchants and fake brands, which has caused a war of words by chinese internet users. 

On the second day after the listing, on July 28th, it was “counterfeiting” by Skyworth Digital's major shareholder Shenzhen Skyworth-RGB Electronics Co., Ltd., and was asked to stop the display and sales of all counterfeit Skyworth TV products from now on. 

fake tv of chinese brand Skyworth, which cost only 500RMB

 

China has been criticized by fakes and plagiarism. In order to change the negative image of China's fake kingdom, the Chinese government has been sparing no effort to organize anti-counterfeiting activities in recent years. From the first “3·15” in the country to the subsequent spontaneous reporting by the whole people, it has already begun to bear fruit. but this time, Pinduoduo seems to give the opportunity to sell fake products to China's third- and fourth-tier cities. 

 

 

Many Chinese netizens said that the listing of the company and the recognition of the business logic behind it are undoubtedly a step backward for 30 years.

 

 

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(Source: JJGLE.COM)