They're being subsidized? How do you explain their fat margins, $15.4B of profits on $54.0 of revenue? https://en.wikipedia.org/wiki/Pinduoduo
Maybe there's some loss leader going on, but comparing it to "VC capital" (venture capital... capital?) doesn't make much sense, any more than calling costco's rotisserie chicken and hotdogs "subsidised by VC capital" doesn't make much sense.
I worked as a mailman a while back, most days there would be more packages in grey plastic wrap (from China) than actual mail. And you could tell that the stuff that was inside usually cost less than the shipping would have cost if you paid full price.
I can’t see how a market distortion is a net benefit to the importing country.
It seems self-destructive.
In practice the value flows from people who don't buy cheap crap from China to people who do.
To be clear, this is the smart thing to do—package delivery SHOULD be subsidized. Amazon should pay into this disproportionately through taxes, though.
You may choose to ignore that and believe someone is selling you something for $5 but that doesn't make it true.
In the case of Temu, they're selling it for $5 of your money, and $5 of someone else's money, in order to capture you as a customer in the hope that you continue to buy things when they increase the price to $6, then $8, then $10, $15, $30 and so on in the future.
This is the Uber playbook, and if you have a solid product that people want and you can spend VC money long enough to build a trusted brand (or ideally keep prices artificially low until the competition gives up and you have a monopoly) it's very lucrative. I don't see it working for Temu myself. They sell things people don't need so as soon as the prices go up they'll probably fail. That said, Amazon see them as enough of a threat to launch Haul, so what do I know?
Sir, I suggest you use the word "sell" in its usual way, not your own definition of it. If someone takes $5 and gives you in exchange the merchandise and right of ownership on it, then that indeed does mean they "sell it for $5". The fact that something else is going on doesn't make it false.
Maybe they can capture the market for a brief moment, but if they do have a long term strategy, I’m not seeing one.
(*I poked around a bit, and this may be possible, especially in California.)