Chinese Regulators Challenge PDD Holdings' Refund Policy

Chinese regulators target PDD Holdings' refunds-first policy. PDD's consumer-first approach faces backlash from merchants. Competitors reconsider generous refund policies pioneered by PDD.

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This move targets a practice that allows shoppers to claim refunds without returning purchased items, which small merchants argue places an unfair burden on them.

During a recent meeting in Beijing, regulators discussed the impact of PDD's "refunds only" policy, which has been in place for years. The policy, which withholds payments to merchants for falling short of customer expectations, has faced criticism as China's economy slows down. Merchants have expressed concerns that PDD prioritises consumers over their needs, leading to a rally by hundreds of merchants at PDD's offices in southern China.

PDD's consumer-first approach, instrumental in its growth surpassing Alibaba and JD.com, has faced backlash from third-party sellers who feel pressured to fund the company's global expansion. While PDD has stated it is working on solutions with merchants, there has been no response to requests for comment from company representatives, the ministry, or market watchdog.

Chinese shoppers have benefitted from generous refund policies, pioneered by PDD, allowing buyers to request full refunds while keeping products they are dissatisfied with. However, some competitors, like Kuaishou Technology, have reversed this practice due to resistance from merchants. The dispute coincides with Temu's rapid global expansion, challenging giants like Shein and Amazon.com in certain segments.

Despite its success and Nasdaq listing, PDD's future with Chinese merchants remains uncertain. While it attracts US sellers seeking alternatives to Amazon, concerns linger about suppliers shifting to other platforms domestically, potentially disrupting the company's growth. Reports of dissatisfaction among Temu's Chinese merchants have led to investigations in countries like Indonesia and Vietnam, prompting discussions with e-commerce platforms like Alibaba and JD about refund policies.

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• Chinese regulators target PDD Holdings' refunds-first policy

• PDD's consumer-first approach faces backlash from merchants

• Competitors reconsider generous refund policies pioneered by PDD

Source: BANGKOK POST