China Report is MIT Technology Review’s newsletter about what's happening in China. Sign up to receive it in your inbox every Tuesday.
Take a deep breath. The Chinese Communist Party Congress news cycle is (basically) over.
There are many significant things from the high-level political assembly to talk about, mostly around understanding what the new party leadership means for China’s future, but I’ll point you to political reporters who are real experts in all this down below.
Instead, I want to talk about something big you probably missed last week: There’s a new Chinese e-commerce app that is quietly but quickly growing. It’s called Temu. And on October 17, it became the most downloaded shopping app in the United States.
It’s a pretty big deal for Temu to beat Amazon, Walmart, and its Chinese competitor Shein, especially because your immediate response is probably What? I’ve never even heard of Temu!
Well, you are in good company. The app remains obscure among most people, though it marks another high-profile attempt by yet another Chinese tech giant—after Alibaba, Shein, and ByteDance—to try its luck in the American e-commerce market.
Temu (btw, there’s no official guidance on how to pronounce the name, but I’ve been saying tee-moo) is a global version of Chinese e-commerce company Pinduoduo. Founded in 2015, it entered a market that had been dominated by Alibaba for over a decade, yet it managed to rise through the competition and, in 2020, replaced Alibaba as the company with the most e-commerce customers in China. Today, Pinduoduo has over 730 million monthly active users—more than two times the US population!—and is known for both extremely cheap prices and innovative gimmicks that keep users hooked.
Still, Pinduoduo has remained an unfamiliar name outside the country. So how did Temu rise to the top of the iOS App Store’s shopping chart?
“I believe it’s driven almost exclusively by ads,” says Juozas Kaziukėnas, who founded the e-commerce analyst firm Marketplace Pulse, “because I’m seeing relatively no mentions of Temu on social media. That makes me believe that there’s very little organic recognition of the brand yet.”
I know from my personal experience that at least this first part is true—I’ve been seeing Temu’s ads everywhere. Perhaps because they are targeting Chinese readers (I saw ads in Chinese), or perhaps because I’ve made the mistake of Googling its name (for work and this newsletter in particular), the ads have popped up all over for me, including in my Gmail inbox. (I didn’t even realize there were ad slots in Gmail.)
According to Meta, Temu has run over 1,000 ads on its platforms since September, with posts in English and Chinese. (For comparison: Similar Chinese apps like Shein and AliExpress have run only dozens of ads.) When it comes to app stores, Temu’s iOS ads are mostly targeting consumers in the US and Canada, while its Android ads are also in seven other countries, according to the app-store advertising database App Growing.
So what are Temu’s offerings like? It has everything from clothing to kitchen products, from car parts to electronics. Otherwise, the defining feature is probably just that they’re cheap. Dirt cheap. Just a quick browse on Monday morning told me you could get 60-cent earrings, $4 home security cameras, $4 wireless earphones, and $6 sneakers. Eighty percent of the orders would be delivered within 10 days, says the website, which is slower than Amazon but on par with Shein.
I admit I’m drawn by how cheap these products are. But price is only one thing people consider when they shop. Is that enough to get US consumers to use Temu?
People often point to Shein, the Chinese online fast-fashion retailer, as an example of how cheap made-in-China goods can succeed in the US despite the decades-long stigma associated with them. Indeed, Shein is taking Gen Z’s closets by storm. But you also need to look at other platforms offering cheap Chinese goods that failed to reach Shein’s level of influence. AliExpress, the overseas version of Alibaba, which has been around since 2010, never managed to really break through in the US even though it also prices products extremely low.
Shein did some things right that AliExpress didn’t—namely, marketing and presentation. By paying influencers to try out its clothes and produce glossy YouTube and TikTok videos, Shein is spreading the idea that, first and foremost, its products are fun and trendy. The fact that they’re made in China is secondary.
The difference in their brand images is clear. Most people would go to AliExpress (or Wish, a comparable American app that sells low-priced Chinese products) only when they know they want something inexpensive. But people go to Shein to check out the latest fashion trend and to get it at an affordable price.
So will Temu be more like Shein or more like AliExpress? My sense is that so far, Temu is looking more like the latter, with its only real advantage being the price points.
“This model of relying on ads to drive every transaction does have an expiration date, and that’s what unfortunately caused the demise of Wish,” says Kaziukėnas. At one point, ads will become too expensive and too inefficient to justify the costs.
To go further, Temu needs to really differentiate itself from other Chinese and American shopping platforms. This is actually something Pinduoduo has done effectively in China. It’s known for an addictive, at times manipulative, app that incentivizes people to share what they are buying on social platforms to get even steeper discounts. In the past two years, the idea of “social e-commerce” that Pinduoduo pioneered has been seen as one of the most successful innovations in China’s consumer tech sector.
But it’s also not clear how that idea would land in the US. The American shopping industry has been reluctant to accept Chinese trends. I used to believe that livestream shopping, which is extremely popular in China, would be accepted around the world and fundamentally change e-commerce. But years later, it still hasn’t happened, and it’s starting to feel like waiting for Godot.
“You see some small attempts to do these sorts of experiments, but if you zoom out and look at what has actually changed over the last 10 years? Not that much. Amazon looks exactly the same,” says Kaziukėnas. “Perhaps [it] suggests that the West is just a much more established environment, economically and also technologically, so it’s unlikely to see these kinds of massive disruptions as you saw in China.”
So good luck, Temu! In the meantime, you’ll probably be hearing this name again soon, and I’ll keep resisting the urge to click on those ubiquitous ads.
Would you use Temu? Let me know at email@example.com.
Catch up with China
1. The US Department of Justice unsealed three separate criminal cases on Monday. In one, Chinese intelligence officers were allegedly found to be interfering in the investigations on Huawei; in another, they were apparently faking academic credentials to obtain sensitive information; and in the last, they were reportedly forcing US citizens to return to China. (Politico)
2. The key thing to understand about the new top leadership of the Chinese Communist Party: It shows the concentration of power by Xi Jinping. (The New York Times $)
- Li Qiang is expected to be China’s new premier, though that won’t be confirmed until March 2023. He brought in Tesla’s investment in a Shanghai factory when he was the city’s top official, though people have mixed feelings about his rise. (The Wall Street Journal $)
3. Want to know what topics Xi Jinping mentioned more than his predecessors in his party congress speech? What did he miss? There are already several quick analyses of Xi’s speech by researcher Vicky Xu, law professor Taisu Zhang, and political science researcher Mike Thompson-Brusstar.
4. For the first time in 25 years, there’s not a single woman in the Chinese Communist Party’s Politburo. (The Wall Street Journal $)
- You can read this profile of Sun Chunlan, the lone female member from 2017 to 2022 and also the “zero-covid” czar of China. (The New York Times $)
5. “Birth tourism” is still alive and well for Chinese families looking to give birth or use a surrogate in the United States, but the process has become much more difficult because of China’s border controls. (NPR)
6. The New Yorker’s Evan Osnos profiled Guo Wengui, the controversial Chinese tycoon who was once close to the country’s political elites but has reinvented himself as a darling of Trump Republicans. (The New Yorker $)
7. Two Chinese filmmakers produced Diagnosia, an animated virtual-reality film that shows the physical and mental abuses that happen in China’s infamous internet addiction clinics. (Sixth Tone)
8. Meta developed the first artificial-intelligence tool to translate Hokkien in real time. The language has no written script but is spoken by over 46 million people in China, Taiwan, Malaysia, and other countries. (Mashable)
Lost in translation
This was a summer overheated by Chinese electric blankets.
As Europeans braced for a cold winter amid the energy crisis, Chinese electric blanket factories suddenly found themselves in hot demand (yes, pun intended). As Chinese publication White Night Studio reported, in the three months from July to September, factories in southern China got massive orders from Europe to produce tens of thousands of electric blankets, a product that had been slowly disappearing in recent years. In the summer of 2022, exports of electric blankets to Europe increased 150%. Established factory owners were getting 300 calls a day asking for more supply, while rookies blindly entered the industry, opening new production lines.
However, the trend came and went quickly. By October, the orders had slowed down as the market demand was being met—and anyway, it’s now too late for the blankets to be made, shipped to Europe, and sold before the chill sets in.
One more thing
Come on, we all butcher pronunciations at times. Maybe our friends make fun of us, maybe they let it go. But would you dare correct the Chinese president who was giving a highly anticipated speech in front of the whole Chinese population? In that case, the misspeak might just become the new norm. This week, Singaporean law professor Henry Gao caught a Chinese official (who majored in Chinese language studies, btw) changing his pronunciation of a word in real time during a press conference for the 20th Party Congress—likely because Xi Jinping misspoke the word just a few days before.
See you next week!
Correction: An earlier version of this article stated that Wish was based in Russia, not the US.
Humans and technology
Human-plus-AI solutions mitigate security threats
With the right human oversight, emerging technologies like artificial intelligence can help keep business and customer data secure
Merging physical and digital tools to build resilient supply chains
Using unique product identifiers and universal standards in the supply chain journey, the whole enterprise can unlock extended value
Unlocking the value of supply chain data across industries
How global standards and unique identifiers are turning supply chain data into a game-changer
Transformation requires companywide engagement
Employees need to be heard for leaders to overcome the hurdles of organizational change
Get the latest updates from
MIT Technology Review
Discover special offers, top stories, upcoming events, and more.