Depending on who you ask, Pinduoduo could be a dangerous threat to traditional retail and small businesses, or a godsend app to consumers struggling with high cost of living. The massive e-commerce platform known for ultra-low prices through group-buying has taken the world by storm. It offers incredible savings as well as inconsistent quality at the same time.
Ordering directly from overseas has never been easier. Drawn by rock-bottom prices, doorstep delivery and automatic consolidated shipping, Malaysians are flocking to cross-border e-commerce giants for everything from gadgets to sofas. If you think Shopee or Lazada was cheap, wait till you try Pinduoduo or Temu, which is rewriting consumer habits and squeezing domestic traders.
The business model – group-buying sourced directly from factories and wholesalers, cutting the middle men in the process – is creating such a huge havoc that local retailers are now sounding the alarm, even demanding government intervention to level the playing field before they are forced to close shop entirely. The impact is real and the disruption is massive.
The Hungry Ghost Festival was expected to be a peak sales period for Lee Chuan Wei, 47, who owns a Chinese prayer materials business in Penang. Observed during the seventh month of the lunar calendar, the festival began on Aug 13 this year and is traditionally an important period for these goods. But there’s something scarier than the opening of the gates of the underworld to allow spirits roam the living realm.
Mr. Lee said sales of offerings and other ceremonial items in the week leading up to the festival were just 60% of those in the same period last year. “At least there were some inquiries close to the eve last year. Now, there isn’t even a single query. It saddens me,”- he told The Straits Times on August 6. He blamed the business decline on Pinduoduo’s entry into Malaysia in late 2025.
The Chinese e-commerce giant retails some items, such as joss sticks, for half of what Lee pays his wholesale suppliers. Pinduoduo is able to keep prices ultra-low by using a “C2M” (Customer-to-Manufacturer) model that cuts out traditional middlemen, wholesalers, and physical retail markups – connecting “buyers directly to factories”.
Pinduoduo operates under the same parent company – PDD Holdings – as Temu, a global online marketplace widely known for its rock-bottom pricing and mass-market, unbranded goods. Mirroring Temu’s high-volume, direct-from-factory strategy, Pinduoduo provides free shipping from China to Malaysian shoppers, even for a single item priced below RM2.
This stands in contrast to established regional e-commerce players such as Shopee and Lazada, which require a minimum purchase to qualify for free shipping. Such direct factory-to-consumer shipping methods, which eliminate middle layers, are increasingly popular among shoppers. In 2025 alone, 54% of Malaysian online shoppers bought from overseas retailers.
However, the trend is putting pressure on Malaysia’s micro, small and medium-sized enterprises (MSMEs), which employ nearly half of the nation’s workforce and contribute nearly 40% of the country’s gross domestic product. For small retailers that rely on selling everyday goods at a margin, the influx of ultra-cheap products shipped directly from China makes it harder to compete.
{ Local Retailers Under Pressure }
Among retailers feeling the pressure from low-cost overseas goods is Ipoh supermarket owner Wong Yeong Jin. With price-controlled essentials such as cooking oil, flour and sugar generating only single-digit profit margins, 50-year-old Wong relies on higher-margin products, such as towels and other household items, to sustain his business.
“They (Pinduoduo) hurt our profits. We can barely survive if consumers can buy a nail clipper for RM1 with free shipping,” – he said. Backing his concerns, Hong Chee Meng, national president of the Federation of Sundry Goods Merchants Associations of Malaysia, said the influx is undercutting neighbourhood shops. The association represents 4,000 members nationwide.
“(Anecdotal) feedback from members in Johor and Kuala Lumpur indicates that sales dropped by up to 30% after Pinduoduo entered the market. Previously, (seasonal) sales would drop by 10% at most before rebounding.” An industry insider revealed – “State subsidies from Beijing help Chinese e-commerce platforms keep their prices ultra-low.”
Securing government support for cross-border logistics costs remains a top priority for the platforms’ management team, said the individual, who declined to be named as he is not authorized to speak to the media. Citing such early retail impact, local business groups have urged the Government of Malaysia to address what they perceive as unfair competition.
Eugene Sing, president of the Association of Praying Material Traders Malaysia, warned that without regulation, many independent retailers could face closure, threatening jobs and tax revenues in the long run. By shipping ultra-cheap goods directly from Chinese factories to global consumers, PDD Holdings bypasses traditional retail supply chains.
“In Indonesia, all online shops must be registered, with local hires and warehouses required, to protect domestic businesses. Allowing ‘dumping’ will hurt Malaysian workers while benefiting mainland Chinese workers,” – said Sing, whose association represents 300 members and 2,000 retail shops nationwide.
To protect its own domestic economy, Jakarta has mandated that e-commerce platforms prioritise local MSME products over imported goods in search results, among other measures aimed at shielding more than four million Indonesian online merchants. Indonesia is also preparing new regulations to standardise service fees on e-commerce platforms in an effort to improve fairness for MSMEs.
Concerns from the business community have prompted calls for tighter regulation in Malaysia. Member of Parliament Tan Kar Hing has called for Pinduoduo to be suspended from app stores, arguing that the e-commerce platform has no physical footprint in Malaysia, unlike established players such as Shopee, Lazada, and TikTok Shop.
“At least the trio have registered themselves in Malaysia. They have a logistics, supply chain, and business ecosystem that employs locals. Pinduoduo does not,” the Perak MP told ST on August 7. The government has said it is addressing the concerns. The Domestic Trade and Cost of Living Minister, Armizan Mohd Ali, said a new law is being drafted to regulate e-commerce platforms and better protect local MSMEs.
Meanwhile, Deputy Finance Minister Liew Chin Tong met major e-commerce platforms on August 6 to discuss creating a “level playing field” for Malaysian and overseas sellers while ensuring the quality and safety of online goods. He highlighted extreme price undercutting as the primary threat – a pair of earphones priced at RM50 in a local shop that sells for just RM2.30 – doorstep delivery included – on Pinduoduo.
“They sell furniture, electronic items or even coffins and other products that can be sent directly to customers’ homes,” – Liew said. “Of course, consumers must be selective when shopping on these platforms. Cheap does not always mean good quality.” Roughly 150 containers are arriving daily to Malaysia to meet growing demand for bargain goods.
SME Association of Malaysia president Dr Chin Chee Seong warned that domestic small businesses face mounting strain. He said – “These platforms can offer products at prices that many local businesses simply cannot match because of their massive economies of scale, highly efficient supply chains and aggressive pricing strategies,”
According to the Department of Statistics Malaysia (DOSM) data, e-commerce transaction income reached RM1.288 trillion in 2024, an increase of 8.8% from the previous year. Federation of Malaysian Consumers Associations (Fomca) chief executive officer T. Saravanan said abnormally cheap goods should serve as a red flag regarding safety, quality and regulatory compliance.
{ Can’t Restrict Foreign E-Commerce }
One man’s meat is another man’s poison. Not everyone agrees that the government should interfere and disrupt the ecosystem. The government should focus on lowering the cost of doing business in the country to make local businesses competitive against Chinese e-commerce platforms, says Parti Warisan vice-president Junz Wong.
Instead of imposing restrictions or protectionism, the Tanjung Aru assemblyman argues that the Anwar government should address the fundamental question of why Malaysian businesses are so expensive to operate. “The government also has to ask why ordinary consumers are increasingly forced to search overseas for cheaper alternatives,” – challenged Junz.
He said that protecting Malaysian businesses must not come at the expense of consumers already struggling with rising living costs. “Do not make Malaysian consumers pay more to compensate for the failure to make Malaysian businesses more competitive,” – Wong said, arguing that the real issue over foreign e-commerce platforms goes far beyond cheap imports.
“If Malaysian businesses are becoming less competitive, the answer cannot simply be to make foreign products more expensive. We must also ask what the government can do to make Malaysian businesses cheaper and more efficient to operate,” – Wong said, urging the government to review the cost of taxation and regulation on businesses, particularly SMEs, including the impact of SST expansion, licensing requirements, logistics costs and overlapping compliance procedures.
{ Lower Prices Benefit Some Traders }
Interestingly, the platform that is squeezing some Malaysian businesses is helping others cut costs. A Kuala Lumpur-based Chinese paper offerings manufacturer, who wanted to be known only as Daniel Lee, 40, said he has reduced raw material costs by more than 20% by purchasing through the platform. Previously, he sourced lanterns and paper effigies from several traders in China via phone calls, paying them in cash.
“Now I can get a lamp for RM13 on Pinduoduo instead of RM22.50 through a middleman. Same quality, less cost,” – he said. Nearby, workers busily stuck coloured paper onto human effigies to be burned during the Hungry Ghost Festival. But the trade-off for Pinduoduo’s ultra-low pricing is longer delivery times, with shipments taking at least three weeks, said regular user L.W. Siew, 60.
Other major problems associated with the budget e-commerce platform Pinduoduo include severe security and malware concerns tied to its application (the App is banned in Google Store, but not Apple Store), regulatory crackdowns over deceptive marketing, and widespread complaints regarding counterfeit or substandard merchandise, not to mention delays in refund.
“For local products that are needed urgently, I prioritise Lazada and Shopee, which offer two-day delivery. I once ordered a steel ball for about RM10 on Pinduoduo, but it was not delivered. I did not seek a refund as it was not worth the effort,” – said the Ipoh-based administrative assistant.
Facing this intense competition, Penang merchant Lee has pivoted, offering same-day delivery for Chinese prayer items on orders above RM100. “We can’t compete with Pinduoduo on price, so we compete on delivery speed, hoping to retain as many customers as we can,” – he said. Instead of whining and complaining, perhaps business owners should start thinking about value proposition to differentiate from Pinduoduo.
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August 20th, 2026 by financetwitter
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