Pinduoduo, Douyin, and Kuaishou struggling with growth

In 2024, some of China’s leading internet companies, including Pinduoduo, Douyin (TikTok’s Chinese counterpart), and Kuaishou, reported sluggish growth.

Their Q2 financial results signal a potential turning point after a decade of rapid expansion, primarily driven by recommendation algorithms. As these platforms face increasing competition and saturation in their respective markets, the once-powerful engines of growth are showing signs of slowing down.

Declining Growth Across Key Sectors

Kuaishou, a short video and livestreaming platform, saw a sharp decline across all major revenue streams in Q2.

Its online marketing services grew by 22.1%, down from 30.4% a year earlier. Meanwhile, live streaming revenue dropped by 6.7%, and e-commerce-related services increased by just 21.3%, compared to a 61.4% surge in the same period last year.

This trend of declining growth is echoed across China’s internet giants. Douyin, which once enjoyed soaring popularity, is seeing its e-commerce ambitions wane. Kuaishou, Douyin, and other content-driven platforms struggle to retain users and monetize effectively through their once-dependable recommendation algorithms.

Saturation and Intensified Competition

As Kuaishou’s daily active users (DAUs) increased by only 5.1% in Q2, reaching 395 million, the platform’s monthly active users (MAUs) shrank by 5 million compared to Q1, signaling a decline in user engagement. This reduction in user base and time spent on the app points to market saturation.

Additionally, competition between content platforms has escalated. Kuaishou, Douyin, WeChat’s video platform, and Xiaohongshu (Little Red Book) are all battling for content creators and viewers. As creators diversify their presence across multiple platforms, Kuaishou’s content ecosystem is under pressure, further dragging down growth in livestreaming revenue.

E-commerce and Livestreaming Facing Headwinds

E-commerce, a key growth driver for these platforms, is also experiencing a slowdown. Kuaishou’s gross merchandise volume (GMV) grew by just 15% during its extended 618 shopping festival, a significant deceleration from past years.

Pinduoduo, once the shining star of algorithm-driven e-commerce, reported a slowdown in its GMV growth as well, reflecting broader market challenges.

The livestreaming sector, once a golden goose for platforms like Kuaishou and Douyin, is now facing declining user interaction.

In the first half of 2024, Douyin saw a 29.6% decrease in live-stream engagement metrics, including likes, comments, and new followers. This suggests a growing fatigue among users toward influencer-driven e-commerce, a model that once propelled rapid revenue growth.