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 inexpensive shopper items usually shipped straight from producers in China, has been a lightning rod for controversy. Though not everybody agrees, it appears probably that China’s economic system is within the midst of a manufacturing glut and is trying to rebalance by exporting away the excess. This is able to clarify why Temu has all of a sudden appeared, pushing closely discounted items into abroad markets.
Whereas shoppers would possibly discover Temu’s cheap choices enticing, 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 at any time when it pops up.
The primary concern is that they don’t need cheap Chinese language items flooding the market and placing strain on Indonesian retailers and producers who is perhaps unable to match Temu’s costs. As Temu’s benefit is assumed to stem from a structural imbalance within the Chinese language economic system, Indonesia has made it clear that it doesn’t need to take up China’s extra manufacturing at costs that may harm the native economic system. So they’re blocking it.
Does this imply Temu has no shot at accessing the Indonesian market? Not essentially. However they may most likely must make some concessions to native financial pursuits with a purpose to get it. Final week I wrote about how the European Union has been attempting to leverage market entry with a purpose to power compliance with sustainability requirements within the manufacturing of sure commodities. International locations like Indonesia have balked on the thought, nevertheless it’s really 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 tip 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 known as GoTo, has been struggling, and losses on the e-commerce platform have been dragging down GoTo’s earnings. In different phrases, it might have actually helped GoTo to have a overseas firm with an present and efficient gross sales and distribution community are available in at that individual time and purchase Tokopedia.
It was subsequently 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 helpful 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 lots of Indonesian content material and doing sizable growth offers with Indonesian producers. There’s no conclusive proof right here nevertheless it certain looks like Indonesia as soon as once more leveraged market entry to safe phrases from Netflix that have been helpful to the native economic system.
The Indonesian authorities doesn’t need to take up China’s extra manufacturing, or to be an outlet for deeply discounted Chinese language items, which is able to place native producers and retailers at an obstacle. It’s subsequently blocking Temu from working within the Indonesian market, and that is perhaps the tip of the story proper there. But when Temu desires entry badly sufficient, I wouldn’t be shocked in the event that they get it after making some concessions and below phrases which can be extra helpful to Indonesian pursuits.