Alibaba, Tencent and Other Chinese Giants Wound Up in Indonesia

Because it is a rapidly emerging region, Southeast Asia has long been a popular location for Chinese businesses to launch their global ambitions. Indonesia is the largest country in the region and has the highest population. This makes it a popular destination for expanding businesses.

From Alibaba And JD.comThey are more familiar with ecommerce gameplay and want to discover new markets. TencentWhile WeChat is the dominant social app platform, it has yet to create a profitable e-commerce company. ByteDance was the popular company that made its way into the mainstream via its short video and livestreaming apps TikTok and Douyin. All hope to be part of this vast market. Even though they have invested large amounts of money in the country, it is difficult for big platforms make money.

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Indonesia’s huge population gives an impression of a promising market. According to statistics OOSGAAccording to, an intelligence platform for supply chain management, Indonesia has 158.6 millions e-commerce users. The country’s annual consumption is $53.81 billion. However, the per capita consumption in Indonesia is $339. A similar number of people place orders via their mobile phones, with 63.8%.

In 2016, Alibaba Lazada, an online e-commerce platform, was acquired. It is headquartered in Singapore. The company’s business model is similar to Tmall’s in that it broadcasts a business’s image and helps guide merchants to advertise their brands. Shopee was also launched in Indonesia, and has been supported by Tmall. Tencent It can also offer low prices for consumers.

It has been difficult to generate profits, regardless of Shopee, Lazada or Tokopedia. Tokopedia’s parent company, Indonesian tech giant GoTo announced its financial results for August 30. The net loss for the first half and second quarters of the year was nearly $1 billion.

Logistics is directly responsible. “Indonesia is composed of more than 17,000 islands, and more than half of the population lives on Java and Sumatra. These two islands are transported by roads and railways. Other places have too few people and a long distance between islands. It is impossible to build bridges, so it can only rely on air transportation and ships, which is inefficient and the cost of e-commerce is extremely high.” An e-commerce practitioner told Chinese social media Xiaguangshe.

JD.comShopee, Lazada and Shopee all have self-built logistics solutions. Platforms and merchants have a harder time making money due to the high costs and low prices per customer in the area. In addition, Indonesia’s sales channels are scattered, which makes it difficult for some merchants who want to spread their goods on a large scale to find agents with complete coverage, reasonable prices and reliability.

Along with the problems caused by geography, the Indonesian government placed many restrictions on cross border e-commerce. The Indonesian customs tax policy for imported goods was modified at the start of 2021. The threshold was reduced from $75 to $3 to protect local sellers. According to media reports, Indonesia’s protection of its textile industry may be one of the reasons why Chinese fast fashion giant SHEIN withdrew from the Indonesian market.

The Indonesian government’s attitude is changing, however. The country has made great efforts in recent years to improve its business environment. Furthermore, China has become Indonesia’s largest trading partner for the ninth consecutive year. Since 2019, China has become Indonesia’s second largest source of foreign capital. Just recently, the Jakarta-Bandung highspeed railway was put into operation by Chinese enterprises. This country is showing promise and offers many opportunities for those who are willing to accept the challenges in this huge market.

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