The CEO of short-video app TikTok said on June 15 that the company will pour billions of dollars into Southeast Asia over the next few years, as a report showed its online shopping venture is paying off.
TikTok's e-commerce venture (TikTok Shop) has gained significant market share in the region just a year after its launch.
Southeast Asia, with a total population of 630 million, half of whom are under 30, is one of TikTok's biggest markets in terms of users, generating more than 325 million monthly visitors to the app.
However, the platform has yet to turn this user base into a major source of e-commerce revenue in the region as it faces fierce competition from larger rivals such as Sea’s Shopee (Singapore), Alibaba’s Lazada (China) and GoTo’s Tokopedia (Indonesia).
“We will invest billions of dollars in Indonesia and Southeast Asia in the next few years,” CEO Shou Zi Chew said at a forum in the Indonesian capital Jakarta.
TikTok did not provide a detailed breakdown of its spending plans, but said it will invest in training, advertising and support for small vendors who want to join its TikTok Shop e-commerce platform.
From a modest team of about 100 people, we now have nearly 8,000 employees in Southeast Asia and 2 million suppliers on the platform in Indonesia, the region's largest economy, said Mr. Shou.
TikTok CEO Shou Zi Chew attends an event in Indonesia on June 15, 2023. The Southeast Asian market will bring in $4.4 billion in revenue for TikTok Shop in 2022. Photo: Yahoo!News
TikTok's investment plans come as the Chinese-owned company faces scrutiny from some governments and regulators over concerns that Beijing could use the app to collect user data.
Countries including the UK and New Zealand have banned the app from government phones, moves TikTok said were based on “fundamental misconceptions” driven by broader geopolitical reasons.
The app hasn't faced major bans on government devices in Southeast Asia, but it has come under scrutiny for its content.
Despite lagging behind more established rivals Shopee and Lazada, TikTok Shop is the fastest-growing, expanding its gross merchandise value (GMV) sevenfold to $4.4 billion in 2022 from a modest $600 million in 2021.
From Indonesia, TikTok Shop has aggressively expanded to five other Southeast Asian markets, many of which have large TikTok user bases and have invested in improving their e-commerce capabilities, according to Momentum Works representative Weihan Chen.
The ByteDance-owned company aims to quadruple TikTok Shop GMV globally to $20 billion in 2023. Beyond Southeast Asia, TikTok is also working to expand sales in the U.S. and Europe, although those markets account for a small portion of that $20 billion, according to Bloomberg .
Nguyen Tuyet (According to Reuters, CNN, Yahoo!News)
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