PDD: Chinese ecommerce group seeks shelter in Ireland

Ireland makes its own luck. A favourable tax system has made it a favourite place for multinational companies to set up headquarters. That has especially been the case for US corporations. But a shift from Shanghai to Dublin has not been so common. For PDD Holdings, the parent company of Chinese ecommerce giant Pinduoduo, there is good reason for the move.

PDD has moved its headquarters from China to Ireland. Filings in February show that it had been Shanghai not long ago.

Attractive corporation tax rates, one of the youngest populations in Europe and tax treaties with EU countries are just some of the reasons Ireland gets the nod from multinational groups for their offices.

But PDD has to deal with geopolitical tensions between China and the US. Google’s suspension of Pinduoduo from its Play Store in March, citing malware identified in versions of the app, has damaged its image. Pinduoduo has rejected accusations that its app is malicious.

Beijing wants Chinese company listings and taxes to stay in the country. It will not like this shift. But PDD must seek new growth engines. Sales for the quarter to December missed expectations as business at home slowed. To maintain operating margins, which have turned positive last year, the only answer is overseas markets.

Temu, the discount ecommerce 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 on Apple and Google Play stores within months of its release. That popularity and a surging average daily gross merchandise value also brought increasing scrutiny from Washington.

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