Qingdao teams up with e-commerce upstart for regional sales push

Published on
April 27, 2020

The seafood processing and trading hub of Qingdao, China, has signed a cooperation deal with one of the country’s up-and-coming e-commerce players.

The commerce department of Qingdao municipal government has signed a strategic cooperation agreement with online site Pinduoduo, the NASDAQ-listed entity that has grown spectacularly in five years of existence.

As part of the deal, Pinduoduo will operate an online commerce streaming studio, subsidized by the Qingdao government, to promote local seafood brands and products. At a formal launch recently with Qingdao Deputy Mayor Xue Qing Guo, Pinduoduo Vice Chairman Yong Quan said the company will bring its e-commerce and social media expertise to bear to generate CNY 80 billion (USD 11.2 billion, EUR 10.4 billion) in annual sales for Qingdao seafood and food processing companies. Guo, in return, has promised to push Qingdao to build a China-Japan-South Korea free trade zone, which will give Pinduoduo a tax-free base to market to neighboring countries within an hour’s flight of the city.

Pinduoduo’s total revenues in 2019 were CNY 30.1 billion (USD 4.32 billion), up 130 percent from CNY 13.12 billion (USD 1.83 billion, EUR 1.70 billion) in 2018. The figures were good enough for it to pass JD.com to become the second-ranked player in the world’s top e-commerce market, behind Alibaba.

Yet the company lost CNY 8.5 billion (USD 1.22 billion, EUR 1.10 billion) last year, putting more pressure on the firm to generate new sources of revenue.

While its agreement with Qingdao looks ambitious, Shanghai-based Pinduoduo has made rapid progress in a short time. The firm has distinguished itself from its competitors with a focus on customer retention, often likening its style to that of online gaming. A group-buying type of “social e-commerce” player, Pinduoduo encourages users to share its offers with their social media friends. Its app has been particularly popular in lower-tier Chinese cities, but Pinduoduo has lately been keen to capture the higher-yield customers held by JD.com and Tmall, the key Alibaba online platform.

Distribution and promotion channels on social media are proving increasingly important marketing channels for Chinese seafood distributors. The point was proven recently when aquaculture and distribution firm Zoneco sold 50,000 units of its packaged scallop product in one minute by hiring influencer Li Jia Qi, who runs the “Kou Hong Yi Ge” video channel on Douyin, a TikTok-type social media platform.

Photo courtesy of Ascannio/Shutterstock

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