Temu is a brand new Chinese language retailer that has exploded on the e-commerce scene within the final two years. {The marketplace}, which affords very reasonably priced client items usually shipped instantly from producers in China, has been a lightning rod for controversy. Though not everybody agrees, it appears possible that China’s financial system is within the midst of a manufacturing glut and is trying to rebalance by exporting away the excess. This might clarify why Temu has immediately appeared, pushing closely discounted items into abroad markets.
Whereas shoppers may discover Temu’s cheap choices engaging, some governments are much less enthusiastic – and Indonesia is certainly one of them. The federal government has steadfastly refused to grant Temu a license or different approvals to function in Indonesia, and has sought to close the app down and have it faraway from app shops every time it pops up.
The principle concern is that they don’t need cheap Chinese language items flooding the market and placing stress on Indonesian retailers and producers who is likely to be unable to match Temu’s costs. As Temu’s benefit is believed to stem from a structural imbalance within the Chinese language financial system, Indonesia has made it clear that it doesn’t wish to take up China’s extra manufacturing at costs that may harm the native financial system. So they’re blocking it.
Does this imply Temu has no shot at accessing the Indonesian market? Not essentially. However they’ll most likely must make some concessions to native financial pursuits with a view to get it. Final week I wrote about how the European Union has been making an attempt to leverage market entry with a view to drive compliance with sustainability requirements within the manufacturing of sure commodities. Nations like Indonesia have balked on the concept, however it’s truly a tactic Indonesia has used itself.
An apparent case could be TikTok. Indonesia banned TikTok from making in-app gross sales in 2023, which is how the video platform (owned by ByteDance, additionally a Chinese language firm) makes most of its cash. Since coming into the Indonesian market in 2021, TikTok had grown quickly and blocking such purchases successfully put TikTok’s Indonesian operations on maintain. It wasn’t instantly clear what the top sport was, both.
A couple of months later ByteDance bought a controlling stake within the Indonesian e-commerce platform Tokopedia. Tokopedia, which merged with Go-Jek a couple of years in the past to type a mega tech firm referred to as GoTo, has been struggling, and losses on the e-commerce platform had been dragging down GoTo’s earnings. In different phrases, it will have actually helped GoTo to have a international firm with an current and efficient gross sales and distribution community are available in at that specific time and purchase Tokopedia.
It was due to this fact fairly handy that TikTok, shortly after having its in-app gross sales siphoned off, confirmed up at simply that point and met the decision. Can we are saying definitively that this was a part of a grand technique to make use of market entry to realize useful financial ends? No. However that’s what ended up taking place.
That wasn’t the primary time both. For a few years Netflix was blocked on networks operated by state-owned Telkom. Telkom, and its subsidiary Telkomsel, are by far the most important suppliers of wi-fi and broadband web in Indonesia, so this meant Netflix had restricted choices for penetrating the Indonesian market.
The ban was lifted in 2020, and when it was Netflix started carrying quite a lot of Indonesian content material and doing sizable growth offers with Indonesian producers. There’s no conclusive proof right here however it certain looks like Indonesia as soon as once more leveraged market entry to safe phrases from Netflix that had been useful to the native financial system.
The Indonesian authorities doesn’t wish to take up China’s extra manufacturing, or to be an outlet for deeply discounted Chinese language items, which can place native producers and retailers at a drawback. It’s due to this fact blocking Temu from working within the Indonesian market, and that is likely to be the top of the story proper there. But when Temu needs entry badly sufficient, I wouldn’t be stunned in the event that they get it after making some concessions and beneath phrases which are extra useful to Indonesian pursuits.
