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PDD (NASDAQ:PDD)-owned Chinese e-commerce platform Temu is trying to reduce its reliance on the U.S. market amid growing heat from U.S. politicians toward Chinese companies, The Information reported.
The U.S. accounted for 60% of total merchandise sales on Temu, and the site is now intends to reduce this share to as low as 30% by 2025 the report added citing two people briefed by company executives.
The shopping platform is boosting its presence in regions including, Europe, Middle East, Japan and South Korea, and has informed its merchants to prioritize stocking up on products which are popular in those regions.
Temu, which launched in the U.S. less than two years ago, has come under scrutiny as some U.S. lawmakers had expressed concerns that the company has not done enough to prevent suppliers from using forced labor.
Earlier this month, the U.S. House of Representatives passed a bill that, if approved, would force China’s ByteDance (BDNCE) to sell U.S. operations of its short video platform, TikTok or face a nationwide ban.
Such moves have only added to fears of Temu’s future in the U.S.
PDD has never disclosed financial details about Temu, however, analysts estimate that it is a money-losing business, the report added.
Temu has increased its efforts to woo overseas shoppers last year. The site’s non-U.S. monthly active users have exceeded its U.S. users since the third quarter of 2023, as per data from Sensor Tower. Meanwhile, app downloads from outside the U.S. have surpassed U.S. downloads since the second quarter, the report noted.
“We’re seeing excellent consumer feedback and strong customer retention in the U.S., and we’ll increase investment even further in 2024,” a Temu spokesperson noted in a statement, the report added.
Earlier this month, it was reported that Temu was the top advertiser by revenue for Meta Platforms (META) and among the top five advertisers by spending at Alphabet’s (GOOG) (GOOGL) Google in 2023 in the U.S.
This does indicate that the company still sees U.S. as a vital market.
However, the statement noted that while the U.S. market continues to grow and remains important, its percentage contribution to total gross merchandise value, or GMV, adjusts as the company expands into more markets, and that it was standard outcome of a successful worldwide expansion.