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Yahoo
an hour ago
- Business
- Yahoo
Price wars grip China as deflation deepens, $30 for a luxury Coach bag?
By Liangping Gao and Casey Hall BEIJING/SHANGHAI (Reuters) -Chinese energy sector worker Mandy Li likes to treat herself to a luxury brand handbag once in a while. But since her state-owned employer cut her wage by 10% and the properties her family owns lost half their value, she only buys second-hand ones. "I'm cutting down on large expenditures," said 28-year-old Li, while browsing for items in Beijing's Super Zhuanzhuan second-hand luxury items store that opened in May. "The economy is definitely in a downturn," she said, adding: "My family's wealth has shrunk by a lot" due to the property crisis China has been grappling with since 2021. As deflationary pressures mount in the world's second-largest economy, consumer behaviour is changing in ways that could lead to further downward pressure on prices, raising concerns that deflation could become entrenched, posing more headaches for China's policymakers. Data showed on Monday that consumer prices fell 0.1% in May from a year earlier, with price wars raging in a number of sectors, from autos to e-commerce to coffee amid concerns about oversupply and sluggish household demand. "We still think persistent overcapacity will keep China in deflation both this year and next," Capital Economics said in a research note. New businesses are seeking success by targeting penny-pinchers, from restaurants selling 3 yuan ($0.40) breakfast menus to supermarkets offering flash sales four times a day. But this trend is worrying economists who see price wars as ultimately unsustainable as losing firms may have to close and people may lose their jobs, fuelling further deflation. Consumer price sensitivities' have accelerated growth in the Chinese second-hand luxury market since the pandemic, with annual growth rates surpassing 20% in 2023, according to an industry report by Zhiyan Consulting from last year. But that growth has also led to a spike in the volumes of such items available for sale - which is noticeable in the level of discounts on offer. Some new stores, including Super Zhuanzhuan, are offering items at discounts of up to 90% of their original price, compared with industry standards of 30-40% in recent years. Discounts of 70% or more are also now common on large second-hand platforms, such as Xianyu, Feiyu, Ponhu and Plum. "In the current economic environment we are seeing more existing luxury consumers shifting to the second-hand market," said Lisa Zhang, an expert with Daxue Consulting, a market research and strategy firm focusing on China. But sellers "have more discounts and it's due to more competition." At Super Zhuanzhuan, a green, carryall Christie handbag model by Coach, which its first owner bought for 3,260 yuan ($454) can be re-purchased for 219 yuan ($30). A 2,200 yuan Givenchy G Cube necklace can be found for 187 yuan. "Year-to-year, it's like 20% growth in the number of sellers, but the buyers' numbers are pretty much stable," said the founder of another second-hand luxury business in China, asking for anonymity to speak candidly about the state of the industry. "The middle class - their salary has really decreased. The economy is the number one reason we're seeing these trends." He said big cities such as Shanghai and Beijing have enough buyers to accommodate new market entrants, but elsewhere in China there isn't any room for more. "I would expect the majority of the stores which have recently opened up will actually close," he said. University professor Riley Chang was browsing through Super Zhuanzhuan not because she wanted to buy anything new - she hasn't spent money on big brands since the pandemic - but because she wanted to see what the market was if she sold any of her own possessions. She wasn't happy with what she saw. "I've been to several major second-hand luxury stores in Beijing and Shanghai and they all try to push your price as low as possible," said Chang. ($1 = 7.1833 Chinese yuan renminbi)
Yahoo
02-06-2025
- Business
- Yahoo
Retailer Temu's daily US users halve following end of 'de minimis' loophole
By Casey Hall, Arriana McLymore SHANGHAI/NEW YORK (Reuters) -Daily U.S. users of PDD Holdings' global discount e-commerce platform Temu fell by 58% in May, according to market intelligence firm Sensor Tower, one of many headwinds the e-retailer is facing amid a U.S.-China trade war. Temu decided to slash ad spending in the U.S. and shift its order fulfilment strategy after the White House on May 2 ended the practice known as "de minimis" - which allowed Chinese companies to ship low-value packages to the United States tariff-free. Temu, along with fast-fashion giant Shein, had utilised that provision for years to drop-ship items directly from suppliers in China to consumers in the U.S., keeping prices low. Both Temu and Shein have suffered a sharp drop in sales growth and customer growth rates since U.S. President Donald Trump announced sweeping trade tariffs, according to data collected by consultancy Bain & Company, but Temu's trends have been worse than its rival. Tariffs forced both platforms to raise prices, but Shein has been able to increase the amount of money spent per customer compared to a year ago, the data showed, while Temu has struggled. Temu did not respond to a request for comment on the drop in U.S. daily users or the headwinds it faces in the U.S. market. Engagement on Temu has dropped significantly following the end of the exemption, Morgan Stanley equity analyst Simeon Gutman said in a May note. "While the tariff environment is uncertain, if the status quo remains for an extended period, we believe Temu's competitive threat will continue to weaken," Gutman said. Last week, PDD's first quarter earnings fell short of growth estimates and executives told analysts on a post-earnings call that tariffs had created significant pressure for its merchants. They reiterated Temu's earlier pledge to keep prices stable and work with merchants across regions, referring to a shift to a local fulfilment model announced at the start of May. Temu's previous business model gave merchants responsibility for ordering and supplying their products while the China-based company managed most of the logistics, pricing and marketing. Now, Temu's merchants "can ship individual orders from China to Temu-partnered U.S. warehouses but they would need to address tariffs and customs charges and paper work," according to a note from analysts at HSBC. Temu continues to handle fulfilling orders close to shoppers, setting prices and online operations. In last week's note, HSBC said that Temu's growth in non-U.S. markets has picked up, with non-U.S. users rising to 90% of its 405 million global monthly active users in the second quarter. "New user uptick grew swiftest in less affluent markets," analysts wrote. Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Yahoo
02-06-2025
- Business
- Yahoo
Retailer Temu's daily US users halve following end of 'de minimis' loophole
By Casey Hall, Arriana McLymore SHANGHAI/NEW YORK (Reuters) -Daily U.S. users of PDD Holdings' global discount e-commerce platform Temu fell by 58% in May, according to market intelligence firm Sensor Tower, one of many headwinds the e-retailer is facing amid a U.S.-China trade war. Temu decided to slash ad spending in the U.S. and shift its order fulfilment strategy after the White House on May 2 ended the practice known as "de minimis" - which allowed Chinese companies to ship low-value packages to the United States tariff-free. Temu, along with fast-fashion giant Shein, had utilised that provision for years to drop-ship items directly from suppliers in China to consumers in the U.S., keeping prices low. Both Temu and Shein have suffered a sharp drop in sales growth and customer growth rates since U.S. President Donald Trump announced sweeping trade tariffs, according to data collected by consultancy Bain & Company, but Temu's trends have been worse than its rival. Tariffs forced both platforms to raise prices, but Shein has been able to increase the amount of money spent per customer compared to a year ago, the data showed, while Temu has struggled. Temu did not respond to a request for comment on the drop in U.S. daily users or the headwinds it faces in the U.S. market. Engagement on Temu has dropped significantly following the end of the exemption, Morgan Stanley equity analyst Simeon Gutman said in a May note. "While the tariff environment is uncertain, if the status quo remains for an extended period, we believe Temu's competitive threat will continue to weaken," Gutman said. Last week, PDD's first quarter earnings fell short of growth estimates and executives told analysts on a post-earnings call that tariffs had created significant pressure for its merchants. They reiterated Temu's earlier pledge to keep prices stable and work with merchants across regions, referring to a shift to a local fulfilment model announced at the start of May. Temu's previous business model gave merchants responsibility for ordering and supplying their products while the China-based company managed most of the logistics, pricing and marketing. Now, Temu's merchants "can ship individual orders from China to Temu-partnered U.S. warehouses but they would need to address tariffs and customs charges and paper work," according to a note from analysts at HSBC. Temu continues to handle fulfilling orders close to shoppers, setting prices and online operations. In last week's note, HSBC said that Temu's growth in non-U.S. markets has picked up, with non-U.S. users rising to 90% of its 405 million global monthly active users in the second quarter. "New user uptick grew swiftest in less affluent markets," analysts wrote. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
02-06-2025
- Business
- Yahoo
Retailer Temu's daily US users halve following end of 'de minimis' loophole
By Casey Hall, Arriana McLymore SHANGHAI/NEW YORK (Reuters) -Daily U.S. users of PDD Holdings' global discount e-commerce platform Temu fell by 58% in May, according to market intelligence firm Sensor Tower, one of many headwinds the e-retailer is facing amid a U.S.-China trade war. Temu decided to slash ad spending in the U.S. and shift its order fulfilment strategy after the White House on May 2 ended the practice known as "de minimis" - which allowed Chinese companies to ship low-value packages to the United States tariff-free. Temu, along with fast-fashion giant Shein, had utilised that provision for years to drop-ship items directly from suppliers in China to consumers in the U.S., keeping prices low. Both Temu and Shein have suffered a sharp drop in sales growth and customer growth rates since U.S. President Donald Trump announced sweeping trade tariffs, according to data collected by consultancy Bain & Company, but Temu's trends have been worse than its rival. Tariffs forced both platforms to raise prices, but Shein has been able to increase the amount of money spent per customer compared to a year ago, the data showed, while Temu has struggled. Temu did not respond to a request for comment on the drop in U.S. daily users or the headwinds it faces in the U.S. market. Engagement on Temu has dropped significantly following the end of the exemption, Morgan Stanley equity analyst Simeon Gutman said in a May note. "While the tariff environment is uncertain, if the status quo remains for an extended period, we believe Temu's competitive threat will continue to weaken," Gutman said. Last week, PDD's first quarter earnings fell short of growth estimates and executives told analysts on a post-earnings call that tariffs had created significant pressure for its merchants. They reiterated Temu's earlier pledge to keep prices stable and work with merchants across regions, referring to a shift to a local fulfilment model announced at the start of May. Temu's previous business model gave merchants responsibility for ordering and supplying their products while the China-based company managed most of the logistics, pricing and marketing. Now, Temu's merchants "can ship individual orders from China to Temu-partnered U.S. warehouses but they would need to address tariffs and customs charges and paper work," according to a note from analysts at HSBC. Temu continues to handle fulfilling orders close to shoppers, setting prices and online operations. In last week's note, HSBC said that Temu's growth in non-U.S. markets has picked up, with non-U.S. users rising to 90% of its 405 million global monthly active users in the second quarter. "New user uptick grew swiftest in less affluent markets," analysts wrote. Sign in to access your portfolio
Business of Fashion
27-05-2025
- Business
- Business of Fashion
Temu-Owner PDD Holdings Misses Quarterly Revenue Estimates
Chinese e-commerce company PDD Holdings missed Wall Street estimates for first-quarter revenue on Tuesday, as its domestic platform Pinduoduo suffered from weak consumer sentiment while its international business Temu was hit by uncertain global trade policies. US-listed shares of the company fell close to 7 percent in premarket trading. Despite deep price cuts from retailers and government stimulus measures to boost spending, a prolonged property crisis in the world's second-largest economy has cast a shadow over consumer spending, even on PDD's Pinduoduo, which has out-performed peers with its low-price focus. Both Pinduoduo and global site Temu leverage PDD's extensive network of suppliers in China to provide products at low prices. PDD reported revenue of 95.67 billion yuan ($13.30 billion)for the quarter ended March 31, compared with analysts' average estimate of 102.51 billion yuan, according to data compiled by LSEG. The US earlier this month slashed tariff rates for goods from China valued at under $800 entering the country under the 'de minimis' provision, a trade exemption leveraged by Temu to avoid tariffs and keep prices low. But shifting global trade policy might make it difficult for Temu to avoid price increases in future. PDD's net income fell 47 percent to 14.74 billion yuan in the quarter from 28 billion yuan a year earlier. By Arsheeya Bajwa and Casey Hall; Editing by Murali Anantharaman and Shinjini Ganguli Learn more: US Tax Bill to End Duty-Free Imports of Cheap Foreign Goods The provision would put into law and expand an executive order that came into force earlier this month, halting the 'de minimis' exemption for Chinese imports worth less than $800.
