PDD: Chinese e-commerce group seeks refuge in Ireland

Ireland makes its own fortune. A favorable tax system has made it a favorite place for multinational companies to establish headquarters. This was especially true for US companies. But a move from Shanghai to Dublin was not so common. For PDD Holdings, the parent company of Chinese e-commerce giant Pinduoduo, there are good reasons for the move.

PDD has moved its headquarters from China to Ireland. February documents show that it was Shanghai not long ago.

Attractive corporate tax rates, one of Europe’s youngest populations and tax treaties with EU countries are just some of the reasons Ireland gets the endorsement of multinational groups for their offices.

But the PDD has to deal with geopolitical tensions between China and the United States. Google’s suspension of Pinduoduo from its Play Store in March, citing malware identified in releases of the app, hurt its image. Pinduoduo has rejected allegations that its app is malicious.

Beijing wants the quotations and taxes of Chinese companies to remain in the country. He won’t like this change. But PDD has to look for new growth engines. Sales for the quarter through December fell short of expectations due to the slowdown in domestic business. To maintain operating margins, which turned positive last year, the only answer is foreign markets.

Temu, the discount e-commerce platform also owned by PDD, has started selling in France, Germany and the UK in recent weeks. In a dramatic US debut last year, it became the most downloaded app in the Apple and Google Play stores within months of its release. That popularity and an increase in the average daily gross value of goods have also brought growing scrutiny from Washington.

PDD is correct that a base in Ireland would boost its growth. A move would also help distance him physically from both the US and China. But its share price, down a quarter this year, reflects mounting regulatory risks in both countries. The luck of the Irish will not mitigate this precipice.