New market entry of Chinese mobile e-commerce platforms in context of growth desperation–a case study based on Pinduoduo’s internationalization strategy
Authors: Wang Mengsha , Ni Huiqiang 
Published: December 2024

Purpose

This study aims to analyze a novel phenomenon observed in recent years regarding the internationalization strategies of Chinese mobile internet e-commerce platform companies, which could extend traditional internationalization theories based on the experiences of companies from developed countries and traditional Chinese industries.

Design/methodology/approach

The traditional Uppsala model and imitation learning model of firm internationalization theory do not fully explain the motivations and behaviors behind new market entry in the internationalization practices of Chinese mobile internet companies. This study begins with the new internationalization practices of Pinduoduo, the fastest-growing mobile e-commerce platform in China, with the growth desperation theory as a perspective. By drawing on grounded theory methods, it explores the motivations and entry modes of internationalization within the broader context of recent Chinese mobile internet companies expanding abroad. This provides a theoretical explanation for traditional internationalization motivation and entry mode theories based on the new phenomenon of Chinese mobile internet platforms. Additionally, using Stata software and event study methodology, the financial performance and stock market performance of Pinduoduo’s new market entry behavior are analyzed.

Findings

It posits that when enterprises face pressures related to domestic market growth constraints, they tend to adopt strategic decisions for new market entry to alleviate growth pressures based on new growth opportunities and platforms. During the process of entering new markets, enterprises tend to adopt the “Copy from China” (CFC) model to efficiently replicate the successful experiences in the Chinese market. Market selection for new entries is determined based on psychological distance.

Research limitations/implications

First, the case study provides valuable insights for other mobile internet platforms, but these insights may not be directly transferable to companies in traditional industries; second, directly replicating well-developed business operations and marketing models from the Chinese market to new global markets might face cultural adaptability issues. How could firms balance the general principles of the Chinese internet model with the unique contexts of different global markets will be a crucial focus for future research.

Practical implications

Pinduoduo’s new market entry strategy represents a microcosm of Chinese mobile internet e-commerce platform enterprises’ international expansion choices, reflecting a significant phenomenon and future trend in Chinese business practices. Against the backdrop of widespread growth bottlenecks in current Chinese mobile internet e-commerce platform companies, adopting the CFC model to explore overseas markets in the future presents an opportunity for companies to expand new growth platforms, offering insights for current business practices.

Originality/value

This paper attempts to construct a new theoretical explanation for internationalization with unique characteristics of the Chinese mobile internet industry, based on the integration of “internationalization theories – internationalization practice – comprehensive research methods.” The study enriches strategic literature on the factors influencing new market entry for Chinese mobile internet e-commerce platform companies by exploring how increased growth pressures affect their strategic decisions to enter new markets. Meanwhile, it reveals a new market-entry-mode, the CFC (Copy from China) model, which reflects current trends in the practices of Chinese mobile internet e-commerce platform companies, providing practical insights for the international expansion activities of mobile internet companies in other industries.