The Chinese Government and official media slammed the U.S. government's decision to include Pinduoduo in the Notorious Markets for Counterfeiting and Piracy list. However, Temu's sistercompany has long faced allegations in China that the products on its platform are fake or substandard.
U.S. Accusation and China's Double Standard
On 30 January 2024, the Office of the United States Trade Representative released the findings of its 2023 Review of Notorious Markets for Counterfeiting and Piracy (the Notorious Markets List). The U.S. Government accused major Chinese e-commerce platforms, including Pinduoduo, Temu's sister company, of engaging in and facilitating substantial piracy and counterfeiting. (https://www.opensourceinvestigations.com/)
The next day, on 31 January, the Global Times, an English-language tabloid established by the Chinese Communist Party's flagship newspaper, the People's Daily, called the Notorious Market List, a "political hype aimed at smearing China." The tabloid also quoted a spokesperson of China's Ministry of Commerce (MOFCOM) urging the U.S. to immediately cease its harassment of Chinese companies and businesspeople and provide them with a safe, transparent and fair business environment.
However, the Chinese Government, companies, and media have also accused Pinduoduo of selling fake or substandard goods online.
Chinese brands exposed Pinduoduo's counterfeit sales
Pinduoduo was founded in Shanghai in 2015, using the supply chain model Temu currently follows. By 2018, when PDD Holding, the parent company of Pinduoduo and Temu, went public on the NASDAQ, Pinduoduo had grown to become China's third-largest e-commerce site.
Following its public listing in the U.S., Pinduoduo came under growing scrutiny in China. In July 2018, Chinese television manufacturer Skyworth Group issued a statement demanding that Pinduoduo stop selling counterfeit versions of its products on the platform.
Later that month, Yuanjie Zheng, a well-known children's literature writer, reported Pinduoduo to the National Copyright Administration for selling pirated versions of his books.
In August 2018, People's Literature Publishing House, one of China's largest publishing firms, announced legal action against Pinduoduo for selling pirated books. The publisher said most of the pirated books were sold at a discount of over 50 percent, much lower than the highest discount offered by the publisher.
Chinese Government's actions against Pinduoduo
On 1 August 2018, China's State Administration for Market Regulation (SAMR) launched an investigation into the sale of counterfeit products and items that infringe copyright on the Pinduoduo platform. SAMR called for the Shanghai Municipal Administration of Industry and Commerce and other relevant market regulators to investigate Pinduoduo. SAMR said it would "seriously deal with" any lawbreakers, whether third-party merchants using the platform or the platform itself.
"Conniving with or even supporting the sale of counterfeit products is a legal red line that no online shopping platform can cross," a senior SAMR official told China's state news agency Xinhua. The official asked Pinduoduo to cooperate with market regulators' investigations at various levels, strengthen supervision, and provide information about online shop owners suspected of selling counterfeit goods on the platform.
The SAMR subsequently ordered Pinduoduo to step up vetting products listed on its platform.
In May 2021, the Shanghai Consumer Council (a consumer rights protection watchdog) ordered Pinduoduo to fix problems related to consumer rights protection. According to the council, Pinduoduo was found to have issues with product quality, infringement, forced order cancellation, fake deliveries, poor after-sales service, and pricing tricks to lure new users.
In July 2021, amid media reports that forged quality inspection reports were being sold on some online shopping platforms, including Pinduoduo, the State Administration for Market Regulation ordered the company to immediately deal with online stores that sell fake inspection and testing reports.
In June 2022, Chinese authorities discovered that alcohol-based sanitizers sold on e-commerce platforms, including Pinduoduo, contained toxic methanol.
Chinese media slammed Pinduoduo's product quality
On 3 August 2018, the Global Times published an opinion piece signed by one of its reporters. The reporter claimed he was a former Pinduoduo customer who "had ditched the platform", like many people around him, looking for quality instead of price. He described Pinduoduo as a "controversial platform" "which triggers extensive complaints about the quality of the products and after-sales service."
Lower price is not an excuse for counterfeiting, said the author praising authorities' probe on Pinduoduo. According to the article, "the Chinese people have realized that consumer tolerance doesn't justify Pinduoduo's lax management of, or rather laissez-faire attitude toward knockoffs." Evil is not the lower price; it is the blatant selling of fake products and cheating to confound consumers. Such a business model will dent the company's reputation and eventually make it bite the dust.
A couple of weeks later, China Daily, an English-language media outlet controlled by the Central Propaganda Department of the Chinese Communist Party, published an article titled "Heat turned up in fight against fakes". The article accused Pinduoduo of selling "shanzhai products, look-alike counterfeit goods that feature purposely misspelled names of leading brands". According to China Daily, Pinduoduo was listing copycat brands with names and products similar to those of Chinese technology companies Xiaomi, Huawei, Vivo and Oppo.
In October 2018, Chinese state media called for a crackdown on fake reviews produced by click farms. According to media reports, the cost of a fake positive view on Pinduoduo was between 3 and 5 yuan.
