Temu is a brand new Chinese language retailer that has exploded on the e-commerce scene within the final two years. {The marketplace}, which gives very reasonably priced shopper items sometimes shipped straight from producers in China, has been a lightning rod for controversy. Though not everybody agrees, it appears seemingly that China’s financial system is within the midst of a manufacturing glut and is making an attempt to rebalance by exporting away the excess. This may clarify why Temu has out of the blue appeared, pushing closely discounted items into abroad markets.

Whereas customers would possibly discover Temu’s cheap choices enticing, some governments are much less enthusiastic – and Indonesia is one in all them. The federal government has steadfastly refused to grant Temu a license or different approvals to function in Indonesia, and has sought to close the app down and have it faraway from app shops at any time when it pops up.

The principle concern is that they don’t need cheap Chinese language items flooding the market and placing strain on Indonesian retailers and producers who is perhaps unable to match Temu’s costs. As Temu’s benefit is believed to stem from a structural imbalance within the Chinese language financial system, Indonesia has made it clear that it doesn’t need to take in China’s extra manufacturing at costs which may harm the native financial system. So they’re blocking it.

Does this imply Temu has no shot at accessing the Indonesian market? Not essentially. However they are going to most likely must make some concessions to native financial pursuits with a purpose to get it. Final week I wrote about how the European Union has been attempting to leverage market entry with a purpose to drive compliance with sustainability requirements within the manufacturing of sure commodities. International locations like Indonesia have balked on the thought, but it surely’s truly a tactic Indonesia has used itself.

An apparent case can be TikTok. Indonesia banned TikTok from making in-app gross sales in 2023, which is how the video platform (owned by ByteDance, additionally a Chinese language firm) makes most of its cash. Since getting into the Indonesian market in 2021, TikTok had grown quickly and blocking such purchases successfully put TikTok’s Indonesian operations on maintain. It wasn’t instantly clear what the tip sport was, both.

A number of months later ByteDance bought a controlling stake within the Indonesian e-commerce platform Tokopedia. Tokopedia, which merged with Go-Jek a couple of years in the past to kind a mega tech firm known as GoTo, has been struggling, and losses on the e-commerce platform have been dragging down GoTo’s earnings. In different phrases, it could have actually helped GoTo to have a overseas firm with an present and efficient gross sales and distribution community are available in at that exact time and purchase Tokopedia.

It was subsequently fairly handy that TikTok, shortly after having its in-app gross sales siphoned off, confirmed up at simply that point and met the decision. Can we are saying definitively that this was a part of a grand technique to make use of market entry to realize useful financial ends? No. However that’s what ended up taking place.

That wasn’t the primary time both. For a few years Netflix was blocked on networks operated by state-owned Telkom. Telkom, and its subsidiary Telkomsel, are by far the biggest suppliers of wi-fi and broadband web in Indonesia, so this meant Netflix had restricted choices for penetrating the Indonesian market.

The ban was lifted in 2020, and when it was Netflix started carrying numerous Indonesian content material and doing sizable improvement offers with Indonesian producers. There’s no conclusive proof right here but it surely certain looks as if Indonesia as soon as once more leveraged market entry to safe phrases from Netflix that have been useful to the native financial system.

The Indonesian authorities doesn’t need to take in China’s extra manufacturing, or to be an outlet for deeply discounted Chinese language items, which is able to place native producers and retailers at a drawback. It’s subsequently blocking Temu from working within the Indonesian market, and that is perhaps the tip of the story proper there. But when Temu needs entry badly sufficient, I wouldn’t be stunned in the event that they get it after making some concessions and underneath phrases which are extra useful to Indonesian pursuits.