TikTok e-commerce leader: Indonesia business shutdown "sudden incident, complex reasons"

Affected by the new e-commerce law in Indonesia, TikTokShop closed its e-commerce business in the country's market on October 4th. Recently, the reporter learned exclusively that Kang Zeyu, the head of TikTok e-commerce, stated in internal communication that "this incident happened quite suddenly, and the underlying reasons are quite complex"

Affected by the new e-commerce law in Indonesia, TikTokShop closed its e-commerce business in the country's market on October 4th. Recently, the reporter learned exclusively that Kang Zeyu, the head of TikTok e-commerce, stated in internal communication that "this incident happened quite suddenly, and the underlying reasons are quite complex". "We are still actively discussing with relevant authorities to find the best way to continuously provide good services to Indonesian enterprises and users.

In addition, Kang Zeyu also mentioned internally that TikTokShop has served 80 million Indonesian users, and millions of sellers and creators have earned revenue through the platform. He believes that TikTokShop not only provides services to local small and medium-sized enterprises in Indonesia, but also brings opportunities for their development in the global market.

On September 27th, the Indonesian Ministry of Trade announced a ban on social media platforms such as TikTok from trading goods on the platform. The new regulations also stipulate that the minimum price of imported goods on e-commerce platforms shall not be less than 1.5 million Indonesian rupiah (approximately $100). The new regulations come into effect on September 26th and only allow social media platforms to adjust within a week.

Prior to this ban, Indonesian government officials had publicly stated that TikTok's cross-border e-commerce business posed a threat to local small and medium-sized businesses in Indonesia. But TikTok has repeatedly publicly stated that there is no plan to launch cross-border e-commerce business in Indonesia.

Indonesia claims that the new regulations are mainly aimed at protecting Indonesian small and medium-sized enterprises. But this ban has caught many local small and medium-sized businesses in Indonesia who rely on TikTok e-commerce off guard.

A Jakarta merchant named Nilam said in an interview with Reuters that 80% of his income comes from TikTok e-commerce, "I'm confused where I'm going to make money. An Indonesian businessman named Dennies Soesanto told the New York Times that the government's shutdown of TikTokShop's Indonesian business is not aimed at protecting local small and medium-sized businesses, but other e-commerce platforms. Dennies previously sold goods such as handbags and suitcases through TikTokShop, with a revenue three times that of other e-commerce platforms. After the introduction of new regulations in Indonesia, Dennies immediately lost this portion of their income.

It is worth noting that TikTok e-commerce mentioned that the "complex reasons" are likely related to the fierce competition in the Indonesian e-commerce market.

Apart from TikTokShop, there are three main e-commerce platforms in the Indonesian market: Shopee, Tokopedia, and Lazada. Tokopedia is a local e-commerce company founded in Indonesia in 2009. Tokopedia has always advocated the concept of "localization" externally, claiming to enable local small and medium-sized enterprises in Indonesia to establish online businesses through technology. Tokopedia is also one of the least affected e-commerce platforms under this ban.

Previously, Shopee and Tokopedia were both facing rapid catch-up from TikTokShop. Industry insiders have analyzed that TikTokshop's GMV in the Southeast Asian market is expected to reach $15 billion by 2023, far exceeding the $4.4 billion in 2022, with the Indonesian market being the main source. Nowadays, with the closure of TikTokshop in the Indonesian market, the competitive pressure between Shopee and Tokopedia will be greatly alleviated.

Attached is the original communication from Kang Zeyu, the person in charge of TikTok e-commerce:

Let me share with you a message that our TikTokShop e-commerce business in Indonesia will be suspended on October 4th. The main reason is that Indonesia has recently introduced a new e-commerce bill that imposes a series of restrictions on the use of social media for e-commerce. We need to make compliance improvements to our products and businesses to meet regulatory requirements, so our operations are temporarily suspended.

We will communicate with relevant partners such as users, merchants, logistics, and payment later today. The team will make every effort to handle the follow-up work, ensure the fulfillment of orders and after-sales customer service work that have occurred, and maintain communication with the seller's experts. At the same time, we will actively communicate with the local government and relevant parties to strive for the early completion of product and business transformation and the resumption of operations.

This incident happened quite suddenly, and the underlying reasons are quite complex. We will work hard and strive for an early recovery.

TikTokShop Indonesia has become an important player in the industry over the past two years, serving 80 million Indonesian users and providing opportunities for millions of sellers and creators to grow together with us. We will be committed to providing services to the small and micro enterprise community in Indonesia for a long time. We will not only provide services to local small and medium-sized enterprises in Indonesia, but also bring opportunities for their development in the global market.

We are also committed to rooting in Indonesia, cultivating local talents, and expanding our partnership with more local partners. In our efforts to develop product and business solutions, we are still actively discussing with relevant authorities to find the best way to continuously provide good service to Indonesian enterprises and users, which remains our long-term commitment in Indonesia.

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