Is the so-called '10 Billion Subsidy' Actually Worth 10 Billion? Or Is It Just Another Clever Marketing Ploy?

The Beijing Market Supervision Administration has been bustling with activity lately. After launching an investigation into Auntie Chen, who was caught passing off roast duck legs as roast goose legs, another high-profile interview event has come to light. Five leading e-commerce platforms—Taobao (Tmall), JD.com, Pinduoduo, Douyin, and Xiaohongshu—were summoned and informed of the second batch of typical issues identified during a comprehensive rectification of 'involutionary' competition on their platforms. The main concerns include:

Misleading advertising in promotional activities, non-standard formulation and disclosure of promotional rules, and a lack of transparency regarding information about commodity operators.

It was explicitly pointed out that the '10 billion subsidy' does not genuinely amount to 10 billion yuan. Platforms were urged to take corrective actions to mitigate the risks of 'involutionary' competition during the '6·18' shopping festival.

Among these platforms, Pinduoduo, the pioneer of the '10 billion subsidy,' stands out as the most notable case.

Auntie Chen's roast goose legs turned out to be a hoax, yet intellectuals from Tsinghua and Peking Universities had been indulging in them for years without realizing the deception. Peking University even invited Auntie Chen to deliver a speech, sharing her purported expertise in sourcing, preparing, and roasting goose legs.

This year, 'Goose Leg Auntie' expanded her business ambitions, venturing into Guomao, Beijing's prime white-collar district. Within two months, sharp-eyed CBD workers exposed the ruse—the goose legs were fake, green, and rotten—leading to her reporting.

It goes to show, folks, that sometimes the working class has a thing or two to teach us that textbooks don't cover.

Interestingly, from 2024 to 2026, Chen Xiufeng independently applied for multiple trademarks, including 'Goose Leg Auntie,' with some successfully registered. Netizens quipped: 'All she needs is a name change on her ID card to become the official Goose Leg Auntie.'

The '10 billion subsidy' criticized by regulators is no different from the 'Goose Leg Auntie' scam.

Regulators highlighted that some platforms' '10 billion subsidy' promotions did not involve a genuine investment of 10 billion yuan to subsidize consumers during the '6·18' period but were, in fact, long-term marketing strategies.

The tricks behind the '10 billion subsidy' are now exposed. For instance, supposedly tax-free luxury cosmetics and clothing, refurbished Apple, Vivo, and other brand phones from Huaqiangbei, as well as counterfeit Wuliangye and Jiannanchun Baijiu, have all surfaced at bargain prices in the platforms' '10 billion subsidy' sections.

Platforms assert that their products undergo strict vetting and are safe to purchase, leading some naive consumers to trust in the goodwill of e-commerce platforms. This compelled Wuliangye to issue a statement: After testing 148 online products for free, 18 were found to be counterfeit, with 14 originating from '10 billion subsidy' stores on a major e-commerce platform.

This interview heavily targeted the '10 billion subsidy.' Taking Pinduoduo as an example, regulators stated that the platform failed to clarify the actual subsidy amount and the funding ratio between the platform and merchants in its rules, nor could it provide relevant proof. Additionally, the promotional rules unilaterally absolved the platform of legal responsibilities.

The recent 'ghost store' incident, where Pinduoduo violently resisted law enforcement, remains fresh in everyone's minds. Pinduoduo was fined 1.52 billion yuan, accounting for nearly half of the total fines, effectively stripping away its 'principled' facade.

As the originator of the '10 billion subsidy,' this case has now become a textbook example.

'10 billion' is merely marketing rhetoric, a conceptual package, not financial data or a legal commitment.

Pinduoduo has conducted in-depth research into industrial belts, white-label manufacturing, hit product logic, and pricing structures. It was also the first to introduce the '10 billion subsidy.'

Early on, Pinduoduo attracted small and medium-sized merchants displaced by Taobao's quality upgrades. Leveraging WeChat's ecosystem, it achieved low-cost customer acquisition through group buying and price-cutting tactics, rapidly penetrating lower-tier markets. In 2018, Pinduoduo went public on NASDAQ but was soon interviewed by the State Administration for Market Regulation in August for 'selling infringing and counterfeit goods.'

Following the interview, Pinduoduo pledged to 'conscientiously implement comprehensive rectifications' and launched a high-profile '10 billion subsidy' the following year, targeting high-value products like 3C, beauty, and agricultural products on its platform.

At the time, the '10 billion subsidy' served as a remedy for counterfeit product controversies and growth bottlenecks. Consumers indeed benefited, and the platform gained 200 million users within a year, transitioning from fringe markets to the mainstream and experiencing rapid growth.

After announcing the '10 billion subsidy,' Pinduoduo's marketing expenses totaled 42.6 billion yuan over five consecutive quarters, indicating a genuine financial commitment. Its claim of 'making every day 618 and every night Double 11 for consumers' was not just a gimmick.

Later, other major e-commerce platforms followed suit, turning the '10 billion subsidy' into a regular feature.

But '10 billion' doesn't materialize out of thin air. An e-commerce executive once joked at a 'roast session,' 'Many companies haven’t even generated 10 billion in revenue since their inception, yet they claim to subsidize 10 billion in a single Double 11. Are you giving the entire company away to consumers?'

Today, whether '10 billion subsidy' is a trademark, a goal, a naming convention, or outright deception, there's ample room for manipulation—all rights reserved by the platform.

In Pinduoduo's marketing copy, '10 billion subsidy' and '100 billion support' remain high-frequency terms. Now that '10 billion' has been exposed, eroding consumer trust, will it affect attitudes toward '100 billion'?

Delving deeper, '100 billion support' may also be Pinduoduo's new remedy for its latest bottleneck.

Recently, Pinduoduo's proud 'cut one price' marketing strategy faced setbacks in Europe.

The European Commission fined Temu 200 million euros (approximately 1.5 billion yuan) for failing to effectively prevent the spread of illegal, inferior, and dangerous goods on its platform, violating the Digital Services Act.

Almost simultaneously, the Hungarian Competition Authority issued a final penalty against Temu for misleading consumers and price fraud, totaling over 13 billion forint (approximately 26 million yuan) in fines and compensation orders.

While these hefty fines are manageable for Pinduoduo, which is worth hundreds of billions, they still sting.

Domestic e-commerce growth has slowed. Pinduoduo's financial report showed Q1 total revenue at 106.229 billion yuan, up 11% YoY but below expectations. Net profit attributable to shareholders was 12.547 billion yuan, down 15% YoY. Non-GAAP net profit attributable to shareholders was 14.071 billion yuan, down 17% YoY. Adjusted earnings per ADS were 9.51 yuan, significantly lower than the market expectation of 16.56 yuan.

The core business remains profitable. 'Online marketing services and other revenues' reached 49.936 billion yuan, up about 2.5%. However, no public data shows how much the subsidies have reduced Pinduoduo's advertising revenue.

Transaction service revenues were 56.3 billion yuan, up 20% YoY, accounting for 53% of total revenue, surpassing online marketing for the first time.

Temu has achieved in three years what Pinduoduo took a decade to accomplish domestically, remaining the most critical part of Pinduoduo's growth story. During the Q1 2026 earnings call, management stated, 'We will invest 100 billion yuan over the next three years, resolutely choosing long-term value over short-term financial performance.'

Viewing the 'new initiative' alongside Temu, the former aims to provide a range of self-operated products with direct platform quality control for this channel.

The 'new initiative' special company was established in Shanghai in early February this year. According to Tianyancha APP, a supply chain company named 'New Initiative' has already been formed.

Temu has historically been asset-light, inventory-light, brand-light, and organizationally lightweight. What it seeks next, however, requires heaviness: greater supply chain investment, heavier commodity responsibilities, and more substantial brand-building efforts.

When a platform sells branded goods directly while also allocating traffic and setting rules for merchants, conflicts naturally arise.

Merchants first ask: Is the platform helping merchants upgrade or ultimately replacing them? Is the platform neutral? Will the best data, traffic, and supply chain resources flow to its own business first?

The conflict between platform self-operation and third-party merchants is the most challenging relationship issue. Once a platform damages ecological trust, the loss often extends beyond a season or two of profits—it affects market expectations of the platform's rule neutrality.

On the other hand, the 'new initiative' aims to leverage China's supply chain and the platform's global channel capabilities to directly cultivate brands for overseas markets. The deeper the platform intervenes in transactions, the heavier the regulatory responsibilities and global compliance costs become.

However, compliance capabilities cannot be built overnight. Domestic consumers may be more forgiving, overlooking marketing tactics like the '10 billion subsidy.' Overseas markets, however, will not be as lenient.

The two European fines are just the beginning. In its global expansion, to become a trusted global e-commerce platform, Pinduoduo cannot afford to compromise its commitment to the '100 billion' goal.