PDD-owned Temu enters the Philippines to heat up competition in Southeast Asia’s e-commerce market against Alibaba’s Lazada and TikTok Shop

Budget shopping app provider Temu, owned by multinational e-commerce group PDD Holdings, has started operations in the Philippines to kick off its expansion into Southeast Asia, where it faces tough head-to-head competition against Alibaba Group Holding unit Lazada, ByteDance's TikTok Shop and Singapore-based Shopee.

Temu over the weekend quietly made its "grand opening" in the Philippines, where the Boston-based sibling of Chinese online retailer Pinduoduo offered up to 90 per cent off items such as T-shirts, double-sided tape, and kitchen storage and appliances, according to its website.

The generous discounts form part of a tried-and-tested playbook that has helped Temu climb to the top of Apple's App Store and Google Play's free-app rankings when the online marketplace launched in the United States last year.

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Temu's debut in the Philippines underscores its strategic business expansion across Asia after its foray last month into Japan and South Korea, as it now targets the less wealthier economies in the region.

In June, Temu sent out a survey to online merchants asking which platforms they were already using in Japan, South Korea and Southeast Asia.

Temu, which is now available in more than 38 countries, did not immediately reply to a request for comment on Monday.

Southeast Asia's e-commerce market, which comprises 11 economies at different stages of development, is projected to reach around US$230 billion in gross merchandise volume by 2026, according to an article published last December by global management consulting firm McKinsey & Co.

Indonesia and Singapore lead the region with an e-commerce penetration rate of about 30 per cent, the McKinsey article said. The Philippines, Thailand and Vietnam trail the market with an e-commerce penetration rate of about 15 per cent.

Lazada, for example, recorded double-digit order growth year on year in Southeast Asia during the quarter ended June 30 on the back of improved monetisation and operating efficiency, according to Alibaba's earnings report for the period. Alibaba owns the South China Morning Post.

Southeast Asia's growth potential has become more attractive to Chinese e-commerce services providers, as mainland consumers adjust their spending habits to account for the country's less-than optimistic economic outlook.

That prompted Alibaba last month to inject US$845 million in fresh capital into Lazada, which received its first investment from the e-commerce giant in 2016 when the Hangzhou-based group took a controlling stake in the firm. Alibaba made subsequent investments that increased its stake in Lazada to more than 80 per cent.

TikTok chief executive Chew Shou Zi in June said the company would pour billions of dollars into Southeast Asia in the coming years, based on the rapid rise of its online shopping business across that market.

Temu owner PDD reported a 58 per cent year-on-year increase in first-quarter revenue to 37.6 billion yuan (US$5.2 billion), despite macroeconomic headwinds and slowing retail sales across the country. Nasdaq-listed PDD will report its second-quarter financial results on Tuesday.