It’s hard to get past a month without stumbling on some astounding facts about China. The country is just behind Sweden in going cashless, however, digital payment growth in China is certainly a bigger story than it is in the whole of Scandinavia.

The sheer volumes ($40 Trillion) of digital payments last year was unprecedented. The payment market giants Alibaba and Tencent have been instrumental in the rise of China Fintech.

We see similar trends across South East Asia, in some ways, fuelled by funding from these giants. However, in all this activity, Baidu has fallen behind.

Baidu’s fall and the rise of Pinduoduo has coincided over the past 18 months, breaking the BAT dominance! Is PAT the new BAT?


Arunkumar Krishnakumar is a VC atGreen Shores Capital, where he focuses on deeptech and sustainable investments.


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The last decade in China’s business landscape was largely conquered by the three big names, Baidu, Alibaba and Tencent (BAT). As of yesterday, market caps stood at Alibaba: $459 Billion, Tencent: $386 Billion and Baidu: $35 Billion.

However, Baidu’s market cap has fallen by about 60% since July 2018. This has coincided with the growth of Pinduoduo, whose market cap has grown to $47 Billion – almost twice what it was in July 2018.

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Baidu’s fall as seen in the chart above is largely attributed to a few reasons by analysts.

  • Baidu now has a competitor in Bytedance’s search engine.
  • Advertising revenues have been heavily challenged by WeChat’s advertising business
  • An attempt to look at new revenue sources through AI driven smart speakers have increased the cost base.

As a result they reported a loss in Q1 2019 for the first time since they listed in 2005. It might be a blip in Baidu’s journey, but for the moment, it has been dethroned from the top 3.

In the meantime, there are several reasons for the rise of Pinduoduo. Let us first look at what Pinduoduo’s differentiator is. They have been focusing on selling ultra-cheap products to the price sensitive rural population in China. Apart from their strategy, there are a few factors that have contributed to their growth.

  • Pinduoduo have Tencent as an investor, and are very integrated into WeChat. That helps their go-to-market.
  • Alibaba’s ecommerce juggernaut has had relatively lower penetration in the rural parts of China, allowing space for another big player.
  • The internet penetration in China has allowed for ecommerce to spread far and wide. 72% of rural China transacted online in 2018.

All of this has helped the growth of Pinduoduo as shown in the chart below.

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Image Source: Yahoo Finance

This really fills me with hope. I have been harping about last mile opportunities in India, China and South East Asia for sometime now. The rise of a player that focused on rural ecommerce in China is a trend that could easily be replicated across Asia in a couple of years. Interesting times ahead.