Investing.com - Chinese e-commerce firms are expected to see a "significant" uptick in gross merchandise value in the coming years despite lingering worries over geopolitical tensions, according to analysts at Bernstein.
In a note to clients, the analysts led by Robin Zhu argued that these companies, such as cut-price retail platforms Temu and Shein, will likely be boosted by lower overhead costs and "merchants chasing incremental users".
They noted that PDD's Temu, which recently entered just its second year in operation, has posted higher monthly active users than e-commerce titan Amazon (NASDAQ:AMZN). Temu's gross merchandise value -- a measure of the total value of goods sold -- slightly exceeded $50 billion in 2024, "with a glide path to say $70 billion - $80 billion in 2025", the analysts estimated.
Temu, as well as fast-fashion peer Shein, have surged in popularity in the US, Europe and the UK as customers have moved to snap up their clothes, shoes and gadgets, all of which are offered at rock-bottom prices. Both groups have also aimed to expand their products beyond clothes and into areas like toys and gifts, although regulators have flagged worries around potential fakes and counterfeits sold on the platforms.
When combined with Temu and Shein, short-form video service TikTok and Alibaba-owned AliExpress logged total gross merchandise value of $201 billion in 2024, the analysts said, referencing industry media and internal channel checks. This would represent an almost 90% increase when compared to 2023, they added.
Meanwhile, the analysts said they have a "constructive view" of the ability of e-commerce names in China to expand their presence overseas, even as risks hover around their relationship with the US.
"The main vectors of focus to date related to the Chinese e-commerce platforms have related to a potential change in the De Minimis provision in the US, and recent news that the EU may start an investigation into Temu under its Digital Services Act. Talk of massive tariffs applied to goods imported from China has evolved somewhat in recent months, but likely remains something to watch for," the analysts wrote.
(Reuters contributed reporting.)