CTemu, the Chinese online marketplace that has experienced explosive international growth on the back of an eye-catching and often outrageously cheap range of products, has Price-cutting strategies increasingly face obstacles.
Indonesia ordered Temu removed from its app stores in October, claiming the move was to protect the country's small sellers. Last week, the Vietnamese government threatened to ban Temu and fellow Chinese-owned fast-fashion retailer Shein by the end of this month, saying they were not authorized to do business in the country.
Simon Tolling, co-founder of market insight firm Cube, says the flood of cheap Chinese-made products, often with minimal import taxes, cannot compete with the speed, quality and price offered online. It is said that this has caused damage to businesses and manufacturers.
“Tems have become a lightning rod for all regulators, and now everyone is concerned about whether cross-border import rules should change,” he said.
Poom Chotikavan, operations director at Thailand's Taxa Toys, is struggling to find local manufacturers to produce children's toys as many suppliers have gone out of business. Approximately 2,000 Thai factories across all industries More than 50,000 workers lost their jobs when factories closed last fiscal year, in part due to increased competition and higher costs in China, Reuters reported.
“Sourcing products from China has never been easier.” [so] Their sales just disappeared,” Chotikavan said. “How do they survive in this situation where clients can just stay in touch?” [Chinese] factory? ”
Pinduoduo, the Chinese version of Temu, has been operating since 2015, and the global platform will launch in the US in 2022 and take over the European market the following year. Temu is expanding its presence in Southeast Asia, starting with the Philippines and Malaysia in 2023 and expanding into Thailand, Brunei and Vietnam this year.
The rise of consumerism driven by Southeast Asia's burgeoning middle class has made the region an ideal market, with online shopping sales expected to reach $160 billion in 2024, according to a Bain & Company analysis published in November. It is said that it approaches.
The boom is a good time for Pinduoduo to pursue international growth, as domestic customers have cut back on Pinduoduo purchases due to China's economic slowdown, said Jiangang Li, CEO of venture firm Momentum Works. It has come at a perfect time.
“In China, growth is stagnant compared to the 2010s, but competition is so intense that players need to find other avenues to grow.” [such as] It’s an overseas market,” he said.
However, Temu's entry is giving the market a boost as the economic slowdown has created excess capacity in Chinese factories, forcing Temu's main suppliers to sell in larger quantities and at lower costs.
“Surprisingly cheap”
As in Western markets, Temu combined these cheaply produced items with deep discounts and increasingly aggressive advertising campaigns, and continued to attract shoppers through gamified experiences with prize wheels and countdown timers. .
This has reached hundreds of thousands of customers, including Chotikavan, who bought a MagSafe iPhone holder for his car from Temu for $3. That's less than one-seventh the price if you buy it any other way.
“The products are pretty cheap, but the quality is pretty decent,” he says. “I'm surprised it's so cheap.”
The same is true throughout Southeast Asia. A straw woven school bag that you can buy in Temu for $3 is sold for six times the price by a local vendor in Indonesia. A jacket that sells for $15 in the Vietnamese market can be purchased at Temu for the same price with free shipping.
While consumers enjoy increased access to cheaper goods, local businesses want government action.
Indonesia has taken the toughest stance by raising taxes and banning e-commerce on social media platforms in 2023, forcing TikTok shops to buy struggling local competitors to stay afloat. I no longer get it. Although a ban would protect local manufacturers and higher taxes would increase government coffers, Tem would try to press ahead with entry regardless, Tolling said, despite the platform's repeated rejections. He pointed out that he has repeatedly applied to enter Indonesia.
“This sends a signal to other markets that, 'If it's easy, we'll come.'” Even when it's difficult, we'll come. You show us the rules, you show us what we need to do, and we come along,” he said.
“Their mission is to “take over the world.''
