How Are Chinese Brands Taking Over Pakistan’s E-Commerce Industry?
Pakistan’s e-commerce sector has experienced remarkable growth, ascending to the 46th largest market globally by 2024. According to a report by China Economic Net (CEN), Pakistan could witness a compound annual growth rate (CAGR) of 5.92% from 2024 to 2029, potentially reaching $6.7 billion by 2029. This surge is fueled by a youthful population—64% under the age of 30—alongside increasing internet penetration and smartphone usage. Notably, around 196 Million people use mobile phones with most of them being smartphone users. Moreover, with around 145 million broadband subscribers and a rapidly expanding middle class, the country presents a lucrative market for online retailers.
Despite this promising trajectory, the landscape is increasingly dominated by Chinese e-commerce giants, raising concerns about the implications for local businesses and the broader economy.
The Rise and Expansion of Chinese E-Commerce Players
The acquisition of Daraz by Alibaba Group in 2018 marked a turning point. Initially a Pakistani startup, Daraz was integrated into Alibaba’s massive global supply and logistics network. With enhanced resources, Daraz rapidly scaled, becoming the top e-commerce platform in Pakistan by traffic and volume. At the end of 2024, Daraz hosted over 100,000 local SMEs, with expansion plans aiming to onboard 300,000 sellers in the coming years. Innovations like AI-driven personalized feeds made the platform even more attractive to consumers.
Around the same time, Temu, a Chinese cross-border e-commerce platform under PDD Holdings (owner of Pinduoduo), entered the Pakistani market with a bang. Offering rock-bottom prices, an enormous range of products, and slick app experiences, Temu began rapidly scaling in urban centers. Reports suggest that when Temu entered the market, it was running more than 60,000 ad sets monthly in Pakistan, making it one of the most aggressively promoted platforms in the country.
This aggressive marketing, combined with unbeatable prices, has made platforms like Temu and Daraz go-to destinations for digital shoppers. However, this growing reliance on Chinese platforms has triggered concern among Pakistani entrepreneurs, economists, and policymakers.
Daraz’s Shift Towards Favoring Chinese Sellers
Daraz still operates under a Pakistani name and maintains a local workforce, however, its strategic direction is now heavily influenced by Alibaba’s global agenda. This is most evident in the way product listings appear. For nearly any search on Daraz, the results include Chinese sellers offering cheap, mass-produced goods.
Local sellers have reported that they find it increasingly difficult to compete—not only on price but also on visibility. Daraz’s algorithm and promotions appear to prioritize Chinese imports, a move that has led to disillusionment among many Pakistani SMEs. Complaints have surfaced in business forums and social platforms, with local vendors alleging that Daraz no longer feels like a “local” marketplace.
This shift is not just anecdotal. The platform’s support for direct-from-China shipping, combined with minimal import duties on small packages, makes Chinese products more accessible and often cheaper than local alternatives. As a result, Chinese sellers enjoy better exposure, while Pakistani vendors struggle with rising operational costs, logistics issues, and lack of support.
The Temptation of Cheap Imports and the Dumping Dilemma
The affordability of Chinese products has completely altered consumer expectations. Buyers now expect lower prices, faster delivery, and a wide range of SKUs—all hallmarks of Chinese e-commerce platforms. Through bulk manufacturing, cost-efficient supply chains, and government-backed exports, Chinese brands can sell at prices below local production costs.
This scenario raises alarms about digital dumping, where goods are sold below market value to gain market share. While buyers benefit from cheap prices, local manufacturers are forced to either slash margins unsustainably or shut down. This leads to reduced domestic production, job losses in retail and logistics, and increased dependency on imports.
Even platforms like Temu, which are new to the Pakistani market, are already impacting local consumption habits. As of late 2024, Temu does not offer Cash on Delivery (COD), a popular option among Pakistani consumers, yet it continues to grow. This suggests a strong buyer shift toward trust in foreign platforms, even at the cost of abandoning traditional comfort zones like COD.
The Economic Impact on Local Businesses and Sellers
The long-term impact of this shift toward Chinese dominance is far-reaching. Thousands of local businesses that once thrived by selling on Daraz are now seeing reduced visibility, lower sales, and shrinking profit margins. Many cannot compete with Chinese sellers on cost, and unlike their foreign counterparts, they bear local tax burdens, utility costs, and regulatory fees.
Furthermore, the data infrastructure of these foreign-owned platforms means that critical customer insights and transactional data are leaving the country, limiting opportunities for Pakistani businesses to understand or directly engage with their customer base.
Advertising is another key concern. With millions of dollars in monthly ad spend, Chinese platforms like Temu and AliExpress are outbidding local retailers across Google, Meta, and TikTok ads. This not only affects visibility but inflates ad costs for everyone else, creating another barrier for Pakistani sellers to scale profitably.
The growing Chinese influence in Pakistan’s e-commerce space is unfolding within a policy vacuum. There is currently no cohesive digital trade policy to regulate foreign e-commerce entities, their ad practices, data collection policies, or seller prioritization mechanisms.
Policymakers must respond swiftly. Proposed solutions include:
- Introducing foreign e-commerce regulations, including data localization requirements, ad spend caps, and minimum local seller visibility quotas.
- Offering tax incentives or digital grants to encourage local platforms to compete.
- Investing in training programs to help local sellers improve product quality, brand positioning, and fulfillment logistics.
- Imposing anti-dumping duties on ultra-low-cost imports that threaten domestic industry.
- Supporting homegrown platforms like Vceela, PriceOye, and Buyon, which prioritize local sellers and emphasize quality assurance.
Only through robust digital governance and e-commerce-specific policy frameworks can Pakistan protect its retail future while still benefiting from global integration.
It is essential that Pakistan pursue a balanced approach—welcoming international investment, but also empowering local entrepreneurs to participate meaningfully in the digital economy. By combining policy reforms, entrepreneurial training, investment in local platforms, and consumer education, Pakistan can build a diverse, inclusive, and sustainable e-commerce future.
