Indonesia Requests Google and Apple to Block Temu
Indonesia's communications minister announced on October 11 that the country has requested Google and Apple to remove the Temu app from their stores in an effort to safeguard small businesses.
About Temu
Temu is a China-based e-commerce app offering extremely low prices. It operates in a few Southeast Asian countries and is globally available in 79 countries. A report from Momentum Works revealed that its gross market value in Southeast Asia was a mere $100 million in 2023, compared to $16.3 billion in the United States.
Controversy Surrounding Temu
In the United States, Temu has been criticized for its connections to forced labor. It is known that the Chinese Communist Party's persecution of Uyghurs and other ethnic minorities in Xinjiang, where approximately 90 percent of the country's cotton originates, involves forced labor. Google, Apple, and Temu did not respond to inquiries for comment.
Indonesia's Concerns
The Indonesian minister expressed concerns that Temu's business practices could lead to unhealthy competition. He emphasized the importance of protecting small and medium enterprises, which make up a significant portion of Southeast Asian economies, contributing to 40 percent of GDP according to consulting firm YCP.
Indonesia's E-commerce Industry
Indonesia's e-commerce industry is projected to grow to approximately $160 billion by 2030 from $62 billion in 2023, as per a report by Google, Singapore state investor Temasek Holdings, and consultancy Bain & Co. In Indonesia, 99 percent of businesses are small, and it is the largest e-commerce market in the region. Thailand, the second largest, saw the launch of Temu in July.
Preemptive Measures
Indonesian authorities have not yet observed transactions by Indonesians on the Temu app, and the move to block it is preemptive. The minister also stated that any plans by Temu to enter the Indonesian market through investment would be opposed.
Trade Relations
Last month, Indonesia formally requested to join the Trans-Pacific trade pact, a group of Pacific Rim countries that notably excludes China. The pact allows for low-tariff trade between countries. Despite initial assumptions that the pact lacked incentives to attract China, China applied to join the pact in 2021. However, Australia stated in 2023 that it would not happen.
Global Trade Barriers Against China
Countries have been increasingly erecting trade barriers against China, citing the Chinese Communist Party's predatory pricing tactics designed to put global competitors out of business.
Bottom Line
This development raises questions about the balance between global e-commerce and the protection of local businesses. It also highlights the ongoing tension between various countries and China regarding trade practices. What are your thoughts on this matter? Do you believe Indonesia's move to block Temu is justified? Share this article with your friends and let's discuss. Don't forget to sign up for the Daily Briefing, which is available every day at 6pm.
