In hindsight, it was only a matter of time before Esha Yusof joined the growing ranks of Malaysian shoppers being drawn to Chinese e-commerce giant Pinduoduo.

Esha is a relative newcomer. She signed up in July, more than half a year after the platform launched in Malaysia – and has been smitten with it ever since.

Rock-bottom prices, a vast range of products and seamless payments through a popular local e-wallet make it easy for the 32-year-old to spend an average of 500 ringgit (US$122) a month on everything from home decor and kitchen supplies to fashion and stationery.

“Most items are much cheaper than in the Malaysian market. It’s hard to compare because they come directly from factories or warehouses in China,” said Esha, who works for a competing e-commerce site.

Delivery takes at least two weeks, far longer than many of the app’s local rivals. But that delay has had the opposite effect to the one you might expect.

“With the long wait, it makes more sense to buy almost every week, so the wait feels shorter when parcels keep arriving every week,” Esha said, adding that she still used local platforms for urgent orders.

Many Malaysians are now doing the same. Since the app’s launch in the country last December, social media has been awash with delighted shoppers showing off their hauls, from smartphones to sofas, rolls of toilet paper and even bags of cement.

But surging demand for goods shipped direct from China through the likes of Pinduoduo often comes at the expense of local retailers and manufacturers that struggle to match their Chinese rivals’ deep discounts.

Meanwhile, the millions of parcels flooding into Malaysia and the waste they create are testing the limits of the country’s ability to collect and dispose of it all.

Pinduoduo is far from the only e-commerce platform active in Malaysia. Small local businesses, especially in physical retail and manufacturing, have already seen their margins shrink amid intense competition from earlier entrants like Lazada and Shopee.

Still, the app’s arrival has prompted an outcry from local businesses, who complain that direct shipments from far larger competitors in China have unfairly priced them out of their own market.

Shipping direct from China is the strategy that has powered Pinduoduo’s growth since its founding in 2015, giving more established e-commerce players such as Taobao and JD.com a run for their money. Lazada and Taobao are subsidiaries of Alibaba Group, which also owns the South China Morning Post.

Pinduoduo built its empire on a simple premise: allow consumers to pool their purchases into bulk orders directly with factories and wholesalers to get better deals.

“The influx of low-priced products from foreign e-commerce platforms is putting tremendous pressure on Malaysian retailers, wholesalers and manufacturers, particularly micro and small businesses,” said Chin Chee Seong, president of the SME Association of Malaysia, an umbrella body for the country’s small and medium-sized enterprises (SMEs).

Chin said operational costs had shot up by 80 per cent or more this year, citing an SME Association survey in April that found 76 per cent of respondents reported being hit hard by rising fuel and energy costs, with 45 per cent bracing themselves for a cash-flow crunch over the next six months.

“Malaysian SMEs are being squeezed from both sides – rising operating costs and increasingly aggressive price competition. Many simply cannot afford to keep reducing their prices,” he said.

A widespread slump in SME activity would be disastrous for the economy. Micro, small and medium-sized enterprises account for nearly 97 per cent of all registered businesses in Malaysia and employ around 8 million people, roughly half the entire workforce.

“As local shops and businesses lose sales or cease operations, they will reduce hiring and reduce demand for supporting services such as banking, advertising, accounting and other business services,” said Lee Heng Guie, executive director of the Socio-Economic Research Centre, a Malaysian think tank.

“Closed shops result in commercial and retail outlet vacancies, and the landlords may be forced to reduce rents to attract fewer available tenants, reducing property income.”Retailers of imported consumer goods, from fashion to general merchandise, are likely to be the most immediate and visible casualties. Yet economists warn that the greater danger is that posed to Malaysia’s all-important manufacturing sector.

The rapid shift to buying electronics, apparel, footwear, cosmetics and furniture from overseas sellers could cause local factories to permanently lose their share of the domestic market, said economist Yeah Kim Leng of Sunway University.

“The distinction matters because retail displacement can be transitional as traders pivot to services or niche products, whereas manufacturing capacity, once lost, is far harder to rebuild,” he said.

E-commerce began taking root in Malaysia in the mid-2010s, but demand truly exploded during the Covid-19 pandemic, when strict movement restrictions forced millions of people to do their shopping online between 2020 and 2022.

That habit has become even more deeply ingrained in the years since. An estimated 900 million parcels were delivered across Malaysia in 2025, according to the latest available government data, a multifold increase from the 52 million a decade earlier.

The appeal for e-commerce players is clear. A February note from equity and market analysts at Kenanga Research forecast that the value of e-commerce merchandise in Malaysia would reach 1.5 trillion ringgit in 2027, up from 1.2 trillion ringgit in 2024 (US$268.9 billion). But this penchant for hyper-consumption could overwhelm the country’s capacity to deal with the vast amounts of rubbish generated.

Malaysia’s 135 landfills are already close to capacity, handling an average of 39,000 tonnes of solid waste daily, according to government figures from last year. Any increase in e-commerce shipments will almost certainly add to the growing trash pile.

The government has also pointed to a low recycling rate of 37.9 per cent of recoverable materials and poor waste separation practices at household and local council levels.

“The growth of online shopping, driven partly by competitive prices and convenience, has increased the volume of packaging waste,” said Randolph Jeremiah, vice-president of the non-profit Environmental Protection Society Malaysia.

“Although some online platforms, retailers and manufacturers have begun reducing packaging and switching to more recyclable materials, such as paper filling instead of polystyrene, these efforts may not be sufficient to keep pace with rising consumption.”A raft of government policies has been introduced in an attempt to modernise solid waste management, broaden the use of sustainable plastics and materials, encourage recycling and reduce waste generation.

But grand plans meant little if the problem was not addressed at the source, said Jeremiah, adding that efforts to reduce unnecessary packaging by a handful of platforms, retailers and manufacturers needed to be extended across the entire supply chain.

“At the same time, consumers should make more informed purchasing decisions and practice proper waste separation and recycling,” he added.

The overseas e-commerce blitz is not all bad news for Malaysia, however. For some, losing business in one area opens up opportunities in another.

“We had a 40 per cent drop in demand over the past few months for small parcel deliveries because a lot of people can just get their items delivered straight to their homes,” said a local courier operator who asked not to be named.

“But demand has gone up for shipments of bigger items like furniture and kitchenware and even machinery for factories and construction.”An early investment in warehouse space in Guangzhou, China’s outbound shipping hub, made all the difference for them in securing a steady stream of clients, the operator said, adding: “A lot of our customers nowadays buy direct from factories in China, so having our own warehouse there makes it easy to arrange shipments for them.”Even entrepreneurs worried about the fallout from direct-to-consumer sales from overseas enjoy the savings as shoppers.

“You must also look at the other side [of the coin]. The consumer is very happy. I’m very happy that I can buy my socks for just 12 ringgit,” said the SME Association’s Chin.

What local businesses wanted was not to stop Pinduoduo and other foreign e-commerce giants selling in Malaysia, he said, but a level playing field.

Under Malaysian law, a 10 per cent sales tax on low-value goods took effect in 2024 to cover imported items worth 500 ringgit or less. But trade groups say many direct overseas shipments slip through untaxed, giving foreign sellers an edge.

Local industries have also warned that directly shipped items such as electronics and toys are not subject to Malaysian safety regulations and may endanger consumers.

“Malaysian businesses should not be disadvantaged simply because they pay local taxes, employ Malaysian workers and comply with our laws and regulations,” Chin said. “We must protect consumer interests without sacrificing Malaysian businesses, jobs and our domestic manufacturing ecosystem.”When unveiling next year’s budget on October 9, Malaysian Prime Minister Anwar Ibrahim said the government would introduce an e-commerce bill at the next parliamentary sitting to close legislative and enforcement loopholes and protect local businesses from unfair competition.

But the government must do more than just draft a new law, said Muar MP Syed Saddiq Syed Abdul Rahman.

“Malaysian entrepreneurs are not asking for government handouts. They are not asking for competition to be shut down entirely. They only want fairness, so that competition is fair,” he told parliament during the budget debate.

“[Foreign e-commerce sites] need to establish a local presence. Work with local businesses, open offices and hire workers in this country … I am proposing a middle ground, not shutting them down entirely.”