Temu and Pinduoduo founder Colin Huang is now the richest man in China, dethroning Alibaba’s Jack Ma as king of E-commerce.
According to Bloomberg, Huang overtook bottled water and beveraqes tycoon Zhong Shanshan, owner of Nongfu Spring, as China’s richest billionaire with his net worth reaching $48.6 billion.
Colin Huang‘s PDD Holdings Group, the parent company of the Pinduoduo platform that specializes in providing products at low prices, has been in operation since 2015.
Pinduoduo and its international trade platform Temu ended the domination of Jack Ma’s Alibaba in world e-commerce.
The group’s Temu, a separate application for international trade, has been very successful but has been criticized for its trading practices in several countries, including France.
Colin Huang, 44, has a fortune estimated at $48.6 billion, according to the Bloomberg ranking.
The e-commerce mogul was born in 1980 in the eastern Chinese city of Hangzhou. Early on, he showed an affinity for mathematics, and by his teenage years, he had become a numbers genius. His skills landed him an engineering job at Google in 2006, and he returned to China in 2007 to expand Google services in the country.
Once he left Google, the Chinese entrepreneur established a series of online businesses, including e-commerce platform Oku, online games company Xinyoudi, and Pinduoduo, a platform that sells traditional agricultural products at low prices.
Pinduoduo, which was founded in 2015, quickly blossomed into one of China’s most successful E-commerce empires. The strategy was—and is—to lure in consumers with huge discounts and a vast array of products, occasionally providing unbelievably low prices in China’s fiercely competitive field.
Temu’s business model has Chinese vendors directly shipping to clients globally with no middlemen involved. China’s relatively low manufacturing costs, compared to most Western countries, helps Temu maintain its margins. The company also invests heavily on social media marketing.
The platform’s list of products quickly expanded, and Huang started the offshoot Temu for overseas consumers. Temu launched in the United States in 2022. There, its array of low cost inventory immediately made it popular, earning a loyal base of consumers.
Inflation helps Temu skyrocket
Temu appeared in the US and Europe in 2022. It was at the time of an energy crisis when the world was recovering from the COVID-19 epidemic, the war against Ukraine raged, and the effects of the climate crisis were becoming all the more evident.
All the above contributed to a persistent inflation across the world, and a small percentage of the population became steeped in poverty, while most went bargain hunting.
In business terms, Temu appeared at the right place at the right time. Its great success is attributed mostly to cost-conscious consumers who needed to find goods at a very low price to save for necessities such as food, mortgage, gas, and bills.
Temu was introduced to Europe in 2023. Despite being in the European market for such a short period, Colin Huang’s company says it has on average around 75 million monthly active users in the region.
However, according to Euronews, its great success has drawn accusations of unfair commercial practices, slack safety standards, and disregard for adequate customer service practices.
This year, consumer groups in Europe have claimed Temu is manipulating shoppers into spending more money and distorting their ability to make “free and informed decisions.” Similarly, South Korea has investigated Temu on suspicion of false advertising and unfair practices.
In China, hundreds of merchants demonstrated in the southern city of Guangzhou, alleging unfair treatment in the sale of their products on the platform.
Temu versus Alibaba
As Temu overshadowed China’s other E-commerce giant, Alibaba, the latter is making an effort to regain its place and sheen in the global market.
Jack Ma, the billionaire co-founder of Alibaba, has stepped out of the spotlight in the past few years. However, since March 2023, the company is making an effort to regain not only its share in the market but also its international prestige.
Nonetheless, management reshuffling and new strategies have not helped Alibaba come close to Temu’s customer awareness. Two thirds of Alibaba’s customers are in China, while Colin Huang’s Temu has become a household name in the US, where Alibaba remains relatively unknown.
Furthermore, Alibaba’s platform is not very user-friendly, as the consumer is baffled by the overwhelming number of vendors offering the same product, and images and descriptions of products are often substandard.
More importantly, however, Temu spends incredible amounts of money on marketing. Allegedly, the E-commerce platform spent $3 billion on marketing in 2023.
As it is, it remains to be seen whether Temu’s marketing strategy, consumer awareness, and sales will help it stay at the top of China’s international e-commerce platforms.
