Everyone loves a good deal — except, it seems, China’s e-commerce retailers, who are now slashing prices like their business depends on it. China is facing a wave of challenges as its economy, real estate market, and retail sales slow down, leading to a consumer pullback that’s hitting the country’s e-commerce sector hard.

Battle royale: E-commerce firms fiercely compete by cutting prices to attract budget-conscious consumers. Haitong International Securities’ Jasmine Bai believes the intense competition among rival platforms drives the push for cost-effective offerings. This price war has left sellers struggling to stay profitable, with some smaller e-commerce companies running at a loss for years just to survive.

• JD.com, for example, has seen its average order value decline due to “soft consumer spending,” while Alibaba’s direct sales worsened, dropping from 2% to 9% year-on-year over two quarters (CNBC).
• Meanwhile, PDDPDD
  , the parent company of Temu, has seen its stock fall nearly 33% this year, with the co-founder warning that their high revenue growth is unsustainable amid fierce competition from rivals like ByteDance’s TikTok.

Made in America, Sold in China

Despite the intense competition and slowing growth, America’s consumer-facing sector is pushing further into the region. CostcoCOST

is expanding its presence, now with six stores in China, including a new store in Shenzhen that attracted thousands of eager shoppers. WalmartWMT

is also capitalizing on China’s e-commerce space — a move that has yielded success.

• Walmart recently sold its entire stake in JD.com for $3.6B, ending an eight-year partnership to focus on its own operations in Walmart China and Sam’s Club.
• Over the past two years, Walmart’s sales in China have consistently grown by over 10% each quarter, with nearly 46 clubs nationwide.

Survival mode: China’s recovery is stalling due to a collapsing real estate sector, and efforts to reduce reliance on this industry have only deepened the crisis. Harsh COVID-19 lockdowns have reduced wages, impacted household savings, and led to fewer job opportunities. Shanghai-based e-commerce operator Lu Zhenwang believes, “The good times for e-commerce are over. This year there is fierce competition and I don’t think a lot of sellers will survive another three years.” And with American value retailers making their presence felt, the competition for domestic Chinese retailers will only heat up.