On Friday, October 10th, Indonesian officials announced that they have requested Google and Apple to block the APP of Chinese fast-fashion e-commerce company Temu from their app stores, preventing the Temu application from being downloaded in the country.
Indonesian Minister of Communication and Informatics, Budi Arie Setiadi, told Reuters that this move is aimed at preventively protecting small and medium-sized enterprises in Indonesia from the impact of the low-priced products offered by Temu, a company under the Pinduoduo umbrella. However, authorities have not found any transactions by local residents on the platform.
Temu relies on directly shipping “small packages” from China to customers to rapidly expand its business, and several countries are reviewing this low-cost business model.
Setiadi stated that Temu’s business model involves establishing a direct connection between consumers and Chinese manufacturers to significantly lower prices, which he described as “unhealthy competition.”
Indonesian authorities pointed out that Temu’s business model excludes local stakeholders in the supply chain, such as resellers and transportation providers, enabling them to compete at low prices, enter the market with cheap products, and thus put pressure on local small businesses.
“We are not here to protect e-commerce, but to protect small and medium-sized enterprises,” the minister emphasized. “We must protect millions of (Indonesian) people.”
Setiadi mentioned, “We have taken down Temu in response to public complaints, mainly from reactions of small and medium-sized enterprises.” He noted that the application has been blocked on Apple Store and Google Play Store in Indonesia.
Additionally, Setiadi mentioned the government’s plan to request a similar blockade of Chinese e-commerce platform Shein.
Temu, Shein, Apple, and Google did not respond to Reuters’ requests for comments.
Setiadi also stated that Indonesia will prevent any investment by Temu in the local e-commerce sector.
Temu is working to expand its business in the Southeast Asian market. According to data from the Lowy Institute think tank, the region has a population of nearly 700 million and the fifth largest economy globally, with Indonesia having the largest e-commerce market in the region.
Last year, Indonesia pressured Chinese company ByteDance’s social media platform TikTok (overseas version of Douyin) to shut down its e-commerce services in the country to protect local businesses and user data.
Months later, TikTok agreed to acquire a controlling stake in the e-commerce unit of Indonesian tech group GoTo to remain in Southeast Asia’s largest e-commerce market.
According to reports from Google, Singapore’s state-owned investment company Temasek Holdings, and consulting firm Bain & Co., Indonesia’s e-commerce industry is expected to grow from $62 billion in 2023 to around $160 billion by 2030.
In June, Indonesian Minister of Cooperatives and Small and Medium Enterprises, Teten Masduki, stated that the threat posed by Temu to local businesses is greater than TikTok Shop.
On Tuesday, Indonesian local e-commerce platform Bukalapak.com denied reports about a potential acquisition plan by Temu.
Temu’s website in Vietnam indicated that the company’s move to enter one of the fastest-growing economies in the region seems overly hasty, as the company currently does not support Vietnam’s primary mobile payment service, Momo.
[This article references reporting from the South China Morning Post.]