Shulou(Shulou.com)11/24 Report--

In the past month, there has been an explosion among e-commerce sellers in Southeast Asia. TikTok, a short video platform, has been banned from engaging in e-commerce business following a ban by the Indonesian government. This has a direct impact on more than 6 million sellers and 7 million e-commerce content creators on the platform, and it is not too much to say that it is a "catastrophe".

Many businesses question why the government should block an e-commerce platform, which the Indonesian government says is to protect small and medium-sized enterprises.

A month after the ban, the truth emerged: protecting local companies is actually a crackdown on Chinese products.

According to local media reports, Indonesia held a meeting on how to regulate social e-commerce on July 24. At the meeting, the Institute of Economic and Financial Development (INDEF), an Indonesian think-tank, suggested that the government amend trade regulations and name TikTok to tighten controls, citing the "proliferation of Chinese products" on the TikTok platform as a "threat" to local enterprises.

Nailul Huda, a digital economics researcher at the think-tank, said that 95 per cent of Indonesia's e-commerce products were imported from other countries in recent years, with Chinese products accounting for a particularly high proportion.

Citing official Indonesian data, Nailul said that up to 74 per cent of the products sold by Indonesian ecommerce sellers were not local but imported. "even if the sellers are Indonesians, most of the products come from China," Nailul said.

He specifically pointed out that the best sellers of TikTok e-commerce in Indonesia are beauty products and clothing. Indonesia's existing trade regulations do not increase taxes on TikTok e-commerce products, so local textile and clothing enterprises are extremely vulnerable to Chinese products.

At this meeting, Chinese products and TikTok platforms are seen as dangerous. The INDEF think tank coincides with factions in the Indonesian government that boycott Chinese companies and oppose free trade.

Shortly after that, Teten Masduki, Indonesia's minister of small and medium-sized enterprises, convened a closed-door discussion, after which he accused local companies of being unable to compete with TikTok for the existence of a large number of Chinese goods, which were too cheap and suspected of predatory pricing. Various departments in Indonesia have also spoken out one after another, saying that TikTok e-commerce is suspected of monopolizing the market and harming small and medium-sized enterprises.

On September 27, Indonesia's Ministry of Trade announced a ban on e-commerce transactions on social platforms. The hunt for TikTok e-commerce finally fell to the ground.

After the closure of TikTok e-commerce in Indonesia, a number of e-commerce platforms have responded to the government. Southeast Asian e-commerce giant Shopee has announced that it will stop selling goods from foreign or cross-border sellers from October 4. Zhang Chenghuan, Lazada Indonesian CEO, affirmed the ban, saying that "it has brought a more positive and healthy competitive environment for the long-term growth of the industry."

However, banning TikTok e-commerce and cracking down on Chinese products did not bring the desired "material benefits". Nearly a month after the ban, Danaa, Indonesia's largest textile market, has not seen a boom in the flow of people, al-Jazeera reported. On the contrary, passenger traffic here is half as low as it was during the outbreak.

Even Fithra Faisal Hastiadi, an economist and former spokesman for Indonesia's Ministry of Trade, believes that banning TikTok e-commerce is a mistake. He pointed out that the Indonesian government's claim that cheap Chinese goods are attacking Indonesia's traditional market is a set of hypocritical remarks. Long before TikTok e-commerce entered Indonesia, Chinese goods had been pouring into Indonesia for more than a decade.

On the other hand, the majority of Indonesian local sellers on TikTok e-commerce, they sell things and promote brands on this platform, which not only obtains the channels to survive, but also creates more labor demand and economic value. In fact, it is Indonesia's small and medium-sized businesses that have been hurt by the Indonesian government's blindly prohibiting rather than standardizing practices.

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