Pinduoduo Looks to Improve Transparency After Fake Goods Scandal
Liao Shumin
/SOURCE : yicai
Pinduoduo Looks to Improve Transparency After Fake Goods Scandal

(Yicai Global) Dec. 13 -- China's third-biggest online retail player Pinduoduo is making its suppliers' factory operations more transparent as it looks to bounce back from a string of complaints that it sold counterfeit merchandise.

Shanghai-based Pinduoduo has picked out 20 factories to use in a pilot program for the change, news portal QQ reported. Some of the products made at these plants include Jiaweishi robot vacuums, Chaozhou Songfa ceramics and Zhejiang Sanho kitchenware. Pinduoduo hopes to roll out the scheme at 1,000 factories covering all industries.

The platform, which brands itself as an affordable goods marketplace, has had to banish millions of problem products from its e-shelves over the past few years after a string of manufacturers accused the firm of selling fakes. China's State Administration for Market Regulation also began investigating the company in August this year, just days after it raised USD1.6 billion in an initial public offering on the Nasdaq.

Pinduoduo will start live-streaming videos of the factories production processes, including design and manufacturing, so purchasers can have peace of mind that products are genuine. Consumers can find the plants involved in the pilot scheme via the mobile app.

The factories will all upload purchasing records of raw materials, audit reports and production logs, which will be synchronized with Pinduoduo's data system to offer full traceability along the supply chain.

The companies Pinduoduo is trialing for the new scheme all have similar traits: they are contract manufacturers for well-known domestic and overseas brands and have an important role in international supply chains, it said. They also seriously lack marketing channels and experience and are struggling to scale up to take advantage of economies of scale.

Pinduoduo hopes to change that by offering big data analysis and research and developing recommendations, and help their products get more exposure through improved web traffic.

Editor: James Boynton

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Keywords: Pinduoduo , Counterfeits