---
title: "PDD: Confident in Recovery, Delivering \"Good Prices\" and \"Good Service\" as Our Duty"
type: "Topics"
locale: "en"
url: "https://longbridge.com/en/topics/6503644.md"
description: "PDD 1Q23 conference call summary, please refer to &#34;PDD speaks with strength to refute the short-sellers&#34; for financial report review."
datetime: "2023-05-26T14:34:57.000Z"
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author: "[Dolphin Research](https://longbridge.com/en/news/dolphin.md)"
---

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# PDD: Confident in Recovery, Delivering "Good Prices" and "Good Service" as Our Duty

**Minutes of PDD 1Q23 Conference Call, Financial Report Review Please Refer to "**[**PDD Speaks with Strength to Short Sellers**](https://longportapp.cn/zh-CN/topics/6500363)**"**

**I. Management Remarks**

**(A) Performance Highlights**

**1\. Globalization through Temu**

Through the globalization platform Temu, we provide affordable and high-quality products to consumers worldwide, requiring closer cooperation in different directions, horizontally and vertically. In cooperation with manufacturers, we seek different manufacturers from around the world to provide rich products to global consumers. The focus is on improving supply efficiency and passing on savings to consumers.

We will continue to explore more methods to better meet the diverse needs of global consumers from more perspectives and dimensions. However, we are still in the early exploration stage, and no matter what, we will always start from the fundamental needs of consumers, quickly adapt and iterate, and strive to further create PDD's unique value.

**2\. Women's Power**

We strive to generate more social impact and promote the development of e-commerce in a better way. We hope that more stakeholders will participate and achieve greater success in the digital economy wave.

For female entrepreneurs in e-commerce, we hope to provide them with entrepreneurial space to better balance family and life. We hope to provide employment opportunities for these people on the PDD platform and contribute to community development.

**3\. Reading and Agriculture**

In the just-concluded fifth season of Duoduo Reading Month, PDD invested 100 million yuan to create a reading fund to help high-quality reading. We hope to help more people gain more knowledge through reading and help entrepreneurship.

In cooperation with top universities, we further develop agricultural technology, hoping that such cooperation can further broaden the horizons of young people and join the agricultural development process. Help young people obtain information technology about agriculture so that their innovative ideas can be put into practice.

**(B) Overall Performance**

**Merchants have launched measures to promote consumption growth, and the recovery trend is obvious**. The online market continues to improve, and the consumption willingness of PDD platform users is constantly increasing. The acceleration of consumption vitality has laid a solid foundation for the steady growth of consumption throughout the year. **The company is very optimistic about the prospects of the consumer market.**

**1\. Promotional Activities**

In 1Q23, the company mobilized platform resources to further assist in the activation and conversion of consumption potential. As always, provide users with more affordable and good products. In a series of large-scale activities such as "New Year's Goods Festival", "Spring Festival without Closing", and "New Year's Big Promotion", we increased subsidies and issued additional coupons to cover as many platform users as possible.

In the **recently held "55 Shopping Festival," the investment in consumer subsidies exceeded 4 billion yuan, which was the largest subsidy effort**. In addition to the strength of "more affordable," we further enhance the ability of "good service" and optimize the consumer experience.In April, we launched the Digital Home Appliance Consumption Season, proposing the consumption concept of "618 every day". While ensuring good value, we comprehensively optimized services from multiple dimensions to guarantee consumer experience.

Under the background of boosting consumer confidence, meeting the diversified needs of consumers with high-quality products is both an opportunity and a challenge for the company. We hope to further optimize the platform ecology through measures such as increasing subsidies, expanding product categories, upgrading services, and fully protecting consumer rights, and further promote consumption vitality through high-quality transformation of the platform ecology.

**2\. Competition and Social Impact**

**While consumption is picking up, it has also brought more intense industry competition. As competition intensifies and further differentiates, some competitive behaviors have gone beyond normal business practices.**

For example, since the end of March, dozens of brand flagship stores on PDD have been attacked on a large scale, with organized and premeditated attackers disrupting the normal operation of these stores, causing significant losses. PDD immediately provided bottom-line protection for affected merchants and upgraded its attack and defense strategies, quickly restoring normal business order.

The company will turn the attacks of competitors into its own driving force, such as upgrading the support for 72-hour delivery to 48-hour delivery for the vast majority of product categories; providing service bias for elderly and remote consumers in after-sales strategies; and implementing more proactive customer service strategies, such as providing refund-only services for consumers.

In terms of the supply chain, the company has rooted itself in major factory areas and industrial belts, directly connecting products with consumers, reducing circulation costs, and lowering sales costs at both ends of the supply and demand chain. We will continue to increase investment, optimize supply chain capabilities, strengthen the construction of physical supply chains, promote the transformation and upgrading of traditional industries, and further build competitive advantages.

**Q&A Session**

**Q: Regarding the architectural adjustment, what is the impact of the joint CEO model on the company's future strategy, the main growth driver in the future, and whether the importance of the globalization strategy has been raised?**

**A: Joint CEO:** Zhao Jiazhen and Chen Lei have worked together for many years and have a deep trust. Under the goal of high-quality development of the company, they have formulated clear long-term strategies and will continue to lead the team to execute the strategies. Based on this, they can combine different backgrounds and ideas to achieve more efficient decision-making.

In the past period of time, we have gradually adjusted the focus of our strategy from focusing on growth speed to pursuing the quality of development. This adjustment has received positive feedback from consumers and merchants, which is also reflected in this quarter's financial report. Under the long-term strategy, we will continue to improve the supply chain capabilities, increase high-quality supply, especially further increase support for high-quality merchants, establish a special promotion of a 10-billion-yuan ecosystem, and improve the overall service quality of the platform. We will continue to optimize the platform ecology.

**2\. Main Growth Driver in the Future:** As a technology-oriented company, the value created is closely related to research and development. The company continues to strengthen its research and development capabilities, continuously increase research and development investment, and currently, research and development-related personnel account for half of the total number of employees.China is a huge market, and there is still great potential for companies to develop in China. In the visible future, the Chinese market will be the company's main market. Indeed, competition is intensifying, and opportunities and challenges coexist. Therefore, the board of directors has appointed Zhao Jiazhen as co-CEO with Chen Lei to further strengthen the team's strength in China.

**Q: Highlights of this quarter's business**

**A:** While the entire industry is recovering, the company is also entering a new stage. In the past few years, it has successfully transitioned from marketing-driven to research and development-driven. Now it needs to go all out and fully promote high-quality development.

In the past quarter, with the implementation of policies to promote consumption in various regions, consumer confidence has continued to recover. The company has also benefited from this, and the vitality of platform consumption has been further released.

In order to promote consumption recovery, the company has fully mobilized the resources of the platform and organized multiple large-scale promotional activities, and provided additional coupons to consumers, hoping to increase their confidence in consumption.

The company has built a healthy platform ecosystem of "more benefits + good service", which has received good feedback from consumers and merchants. The growth in the first quarter also reflects the results of ecosystem construction. Looking ahead, we still need to be down-to-earth, further cultivate our internal strength, and create more consumer value. For example, the company has launched a special project for a 100 billion ecosystem, hoping to further enhance the platform's support for high-quality supply.

**Q: What is the strategy for dealing with the 618 competition, especially whether each company will continue to increase subsidies to maintain low prices?**

**A:** Compared with paying attention to the actions of competitors, we pay more attention to our own growth in competition. For PDD, competition is a touchstone for testing capabilities and can motivate the company to iterate quickly. The company adheres to a consumer-centric approach and will respond to all types of competition in a positive and proactive manner.

**Accelerating the construction of a healthy ecosystem of "more benefits + good service":**

**(1) The core of "more benefits" comes from the improvement of retail efficiency and the ability to improve accurate matching processes.** It will also take root in more factory areas and industrial belts, and directly connect high-quality products to consumers. For example, in the "Agricultural Cloud Action" project, relying on supply chain capabilities, it brings fair-priced high-quality agricultural products to more users. We hope to further improve efficiency, transform efficiency into sustainable price advantages, and continue to increase subsidies, issue consumer coupons, and directly give back to consumers.

**(2) "Good service" is currently optimizing the full-process service experience covering pre-sales, sales, and after-sales.** For example, it will tilt customer resources towards the elderly and consumers in remote areas, and upgrade after-sales customer strategies to provide consumers with refund-only services. In addition, a special project for a 100 billion ecosystem has been established to tilt resources towards high-quality merchants and products, promote high-quality growth of small and medium-sized enterprises and high-quality merchants, and improve the overall service efficiency and quality of platform merchants. The company will continue to improve itself in competition and create more consumer value.

**Q: Is the decline in profit margin due to seasonality or intensified competition?**

**Q: Company Strategy**

**A:** The company's strategy is to achieve long-term sustainable high-quality development, making platform growth more robust, helping consumers save more money and buy better products on the platform, and providing better service support for consumers. We believe that patient investment can create more value for consumers and create more value for merchants and all stakeholders in the ecosystem.

Through the billion-dollar ecological special support for high-quality sellers, we provide them with multi-faceted support to achieve better development. As we further promote this initiative, profitability may change slightly in the past two quarters, which is a normal level of change.

**Q: Temu's Financial and User Data**

**A:** Compared with the overall size of the company, Temu is in the early stage, and its current revenue contribution is very small. We hope to better understand the needs of consumers in different markets and further study how to better meet these needs through Temu. If we can do well in these areas, financial indicators will be a natural result.

**Q: Heterogeneity of PDD Agricultural Supply**

**A:** We see broad opportunities to further expand and optimize supply in many categories, such as the low online rate of agricultural products, huge unmet user demand, and many high-quality agricultural products that have not entered an efficient circulation system.

The company is committed to leveraging the power of the platform to improve supply chain efficiency and hopes to help more high-quality agricultural products enter the circulation end. Through e-commerce special training and connecting logistics infrastructure for agricultural industry merchants, we have helped more agricultural products expand their circulation range and reduce the loss of quality and nutrients on the way. In addition, the Duoduo Buy Vegetable business is also continuously exploring and innovating, providing convenient services while further enriching consumers' choices of vegetable baskets.

While continuously expanding the platform supply, we are also vigorously supporting agricultural merchants, allowing high-quality supply to reach more consumers, helping high-quality merchants and platforms enter a virtuous cycle, and continuously improving product and service quality.

Agriculture is the company's long-term strategy, and we will continue to fully mobilize the platform's resources and influence, deeply penetrate the supply chain, and bring more abundant and better agricultural products to consumers.

**Risk Disclosure and Statement for this Article:** [**Dolphin Disclaimer and General Disclosure**](https://support.longbridge.global/topics/misc/dolphin-disclaimer)

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