The news: Temu parent PDD posted its slowest revenue growth in Q2 since the end of 2021, as it struggles to navigate a weak consumer environment in China and regulatory challenges in the US and other key markets.

By the numbers:

• Revenues rose 7% YoY RMB 103.98 billion ($14.51 billion), ahead of FactSet’s consensus estimate for $14.31 billion.
• Net profits declined 3.9% YoY to RMB 30.75 billion ($4.29 billion), significantly better than the 40% decline analysts expected.
• Operating profits fell 21% YoY, a reflection of the company’s significant investments in merchant support measures and other initiatives designed to appease sellers and encourage shoppers to spend.

What it means: While PDD’s Q2 results beat expectations, they show how the company’s primary strategy of undercutting competitors with cheaper prices is becoming untenable in the current political and macroeconomic landscape.

• Beijing’s crackdown on the price wars being waged across China’s economy is forcing PDD to tread carefully, even as it ramps up spending to narrow the gap with JD.com and Alibaba.
• Temu, once the antidote to PDD’s troubles at home, is running into problems: The end of de minimis in the US has effectively eliminated Temu’s price advantages and caused sales to drop, while Amazon’s long shadow has limited its ability to counter tariffs.
• Conditions in other international markets are also precarious. While demand for Temu’s ultra-cheap goods is strong in Latin America, efforts across the region to introduce duties on low-cost imports could impede its growth prospects.