Pinduoduo, China’s latest e-commerce giant and Alibaba’s main competitor, entered the Canadian market last month.
“Small businesses, local family-owned businesses and even small specialty chain stores will be impacted the most by Temu,” said James Wang, adjunct professor in marketing at the University of British Columbia’s Sauder School of Business.
“[The incentives] might change in the future but now they just want to expand the market and grab market share from other North American competitors. Temu is owned by Pinduoduo which has over $90 billion market capitalization, so they have the capital to do it.” Despite the pressure on local businesses, Soberman said it is to consumers’ benefit to have more competition in the Canadian e-commerce space because it will pressure existing North American competitors selling similar products to reduce their prices.
The platforms all offer competitive pricing supported by low-cost manufacturers in China and Canada’s $150 duty-free policy. Free shipping is also offered for all products or above a certain purchase amount. Ufimstseva said the entry of Pinduoduo will further grow Canada and China merchandise trade value and potentially result in greater Canadian dependence on Chinese merchandise imports.