China's Temu owner sees profit almost halve as US trade war hurts sales

SHANGHAI – Chinese e-commerce giant PDD Holdings saw net profit almost halve in the first three months of 2025 as the Temu owner prepared for a blistering trade war between Beijing and Washington.

The Shanghai-based company said net profit came in at 14.7 billion yuan (S$2.6 billion) in the three months ending March 31, down 47 per cent year on year.

The drop came as the economic superpowers are locked in another bruising trade stand-off that saw US President Donald Trump in April scrap a customs exemption for goods valued under US$800 (S$1,030).

The exemption was long a vital part of the business model supporting platforms offering low-cost goods like Temu.

As part of a detente in the tariff stand-off between China and the United States, Mr Trump signed an executive order in May that set duties on “de minimis” items sent through the US Postal Service to 54 per cent of their value, or a US$100 payment.

A prior tariff had been set at 120 per cent.

In a statement with the earnings release on May 27, PDD Holdings’ co-chief executive Lei Chen said the company made “substantial investments… to support merchants and consumers” and deal with “rapid changes in the external environment”.

“These investments weighed on short-term profitability but gave merchants the room to adapt”, he said, insisting they were focused on “strengthening the (platform’s) long-term health”.

The firm also saw revenue growth slow for a fourth straight quarter.

It said revenue in the first quarter rose 10 per cent year on year to 95.7 billion yuan.

But that was down on the 24 per cent growth recorded in the previous three months – and a severe drop from the 131 per cent growth it saw at the start of 2024.

The growth slowdown was “expected”, said PDD Holdings’ vice-president of finance Jun Liu, adding that the downturn was “accelerated by the changes in the external environment”.

She warned that the company’s financial results “may continue to reflect the impact of sustained investments… through uncertain times”.

PDD’s New York-listed depository receipts plunged more than 13 per cent on May 27. AFP

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