Thailand Post's logistics activities for TikTok fell by 50% from July to this month, said president Dhanant Subhadrabandhu.
Temu's entry is a critical challenge to the local e-commerce landscape that affects all related parties, especially online and offline retailers, because of its highly competitive product prices and unique business model, he said.
Mr Dhanant said the company is monitoring Temu's moves in the local market.
The state agency is eager to seek cooperation or a channel to connect with Temu through a logistics partnership model, similar to the collaboration Thailand Post has with several e-commerce and social platforms, such as Shopee, Lazada and TikTok.
Mr Dhanant said he plans to meet a representative from Temu next month for talks regarding a potential logistics collaboration.
He added that waning consumer spending power and the challenging economic situation has resulted in lower growth of overall e-commerce activities.
Temu is expected to gain popularity among local shoppers, which means several rival platforms would be affected, experiencing declining market shares, he added.
Mr Dhanant said that as a logistics service provider, Thailand Post has to collaborate with all platforms to ensure a sustainable revenue stream.
In the case of TikTok, Thailand Post had tried for almost two years to connect with it via a logistics collaboration. Thailand Post's logistics business began serving part of domestic e-commerce via TikTok from June.
Thailand Post's logistics business generates around 45% of total revenue, followed by the postal group (33%), the international service group (13%), the retail business group (5%), with the remainder coming from others.
Its logistics service commands 32% of the market share, while the rest is dominated by foreign service providers, especially those from China.
Thailand Post is set to establish a joint venture with a giant logistics company in China in early 2025 to boost its volume of two-way logistics transactions with China.
In a separate matter, Thailand Post on Wednesday announced its sustainability mission in the postal service with a goal to have electric vehicles account for 85% of its fleet by 2030 and 100% by 2040.
Temu's Impact in Indonesia: A Battle Against the 'Factory-to-Consumer' Model
Earlier this month, Indonesia’s Ministry of Trade rejected for the third time an application by the Chinese e-commerce app Temu to register a trademark in the country. The rejection reflects a concern about the app’s business model, which allows factories to ship goods directly to consumers, mostly from China. “Factory-to-consumer is not compatible with our policies. Every activity from factory to consumer must have an intermediary, a distributor,” Isy Karim the Trade Ministry’s director general for domestic trade, said last month. He pledged that the government would “monitor the situation closely.”
Launched in 2022 by Pinduoduo, or PDD Holdings, Temu made an immediate impression on the international e-commerce market. It had amassed over 123 million downloads in the United States as of 2023, with its stock surging past Amazon’s and even displacing Alibaba in China. Temu currently operates in more than 58 countries across the world.
In Southeast Asia, Temu has expanded into markets like Thailand, Malaysia, and the Philippines and has garnered widespread popularity across various age groups, from baby boomers to Gen-Z, thanks to its incredibly low prices. The e-commerce platform’s appeal is amplified by its significant discounts and free shipping for customers willing to wait up to 22 days for delivery.
The majority of products on Temu are sourced from China, often from major production hubs like Guangzhou and Yiwu. Temu’s extensive network of suppliers across different regions in China enables consumers to explore a broad array of product categories from diverse manufacturers.
Temu’s success is largely attributed to its Factory-to-Consumer business model, which bypasses resellers and dropshippers, unlike platforms such as Shopee or Tokopedia.
The absence of intermediaries in Temu’s supply chain is a key factor in its ability to offer such competitive prices, making it a highly attractive option for budget-conscious shoppers. This direct approach to e-commerce has undoubtedly contributed to Temu’s growing popularity.
Concerns About Temu's Impact on Local Businesses
In the Indonesian context, however, the authorities have been concerned about the possible impact of Temu. The app presents two significant threats to the Indonesian domestic market. First, its Factory-to-Consumer business model could drastically lower prices for local products, potentially leading to a sharp decline in sales and revenue for local businesses, especially Micro, Small, and Medium Enterprises (MSMEs).
Second, Temu’s producers benefit from access to cheap raw materials and a large workforce, which enables them to produce goods on a massive scale at low costs. These products are then distributed widely through e-commerce platforms, intensifying competition and putting pressure on local businesses. In contrast, local MSMEs face higher raw material costs and minimum wage constraints, making it challenging for them to compete effectively. Additionally, Temu’s robust logistics network enhances its ability to reach customers quickly and efficiently.
Teten Masduki, Indonesia’s minister of cooperatives and small and medium enterprises, has expressed concern that Temu’s model bypasses traditional resellers, affiliates, and distributors, resulting in lower prices but potentially undermining MSMEs and job opportunities in Indonesia.
Fiki Satari, an official in the ministry, has echoed these concerns, suggesting that Temu’s entry into the Indonesian market could be detrimental and should be prevented. He also notes that Temu’s business practices do not align with current Indonesian regulations.
So far, Indonesia’s government has shown little compunction in wielding the power of the state to protect local business and maintain economic stability. In October, it announced a ban on e-commerce transactions on social media platforms, causing TikTok Shop, a fast-growing e-commerce arm of the popular video-sharing site, to cease its operations. TikTok quickly complied, despite expressing regret for the Indonesian government’s decision.
In a statement announcing the policy, Trade Minister Zulkifli Hasan said that the ban aims to “create a fair, healthy, and beneficial electronic commerce ecosystem by prohibiting marketplaces and social media sellers from acting as producers and facilitating payment transactions on its electronic systems.”
Recently, the Indonesian government has also decided to impose import duties of 100 percent to 200 percent on Chinese textiles, in a bid to protect the domestic textile industry from unfair competition due to China’s overcapacity.
This week, the Ministry of Trade and the Indonesian Anti-Dumping Committee also finalized the anti-dumping duties for ceramics, and the decision now awaits approval from Finance Minister Sri Mulyani. The proposed anti-dumping duties will range from 40-50 percent.
By taking these proactive protectionist measures, Indonesia hopes to protect its local businesses and economy from potential adverse effects – and to avoid the political backlash that such economic disruption would likely entail. Despite three attempts to secure operating licenses, Indonesia has yet to permit Temu’s entry into the domestic market. Its past practice suggests that for all its likely popularity with the Indonesian public, it is unlikely to do so.
The Fight for Market Share: Thailand's Steel Industry Faces the Threat from China
The Federation of Thai Industries (FTI) has reported that over 12 million tonnes/year of steel capacity, financed by Chinese firms, is currently under development in Thailand, Kallanish notes.
However, local steel producers in Thailand have had to stop production due to the impact of Chinese steel product imports. FTI has therefore called on relevant departments to restrict the construction of China-backed steel mills because this will directly affect the operations of domestic manufacturers.
The significant new investments include a 5.6m t/y hot-rolled flat steel plant and a 2.28m t/y wire rod plant, both being established by Sinke Yuan (Xinkeyuan) Company in Pluak Daeng City, Rayong Province. Sinke Yuan's projects also include several additional facilities approved by Thailand's Board of Investment (BOI), such as a 2.03m t/y coated steel plate plant, a 1.7m t/y steel pipe plant, a 450,000 t/y cold-rolled flat steel plant, and a 30,000 t/y section steel plant.
Furthermore, China's Yongjin Metal Technology Group is also expanding its footprint in Thailand with plans to establish a 330,000 t/y stainless steel production capacity, which has received BOI approval.
The FTI has expressed concerns that these new capacities may surpass Thailand's existing domestic steel demand, potentially leading to oversupply that could further deteriorate market conditions. The Iron & Steel Institute of Thailand (ISIT) projects a modest increase in Thai finished steel consumption, with a 2.5% rise anticipated for 2024 to 16.7 million tonnes, and a further 2% increase to 17.1mt in 2025.
Currently, the steel industry's capacity utilisation in Thailand is at a historic low, dipping below 30%. Industry insiders attribute this decline not only to sluggish local demand but also to the impact of ultra-low-priced Chinese imports, which they believe constitute market dumping. In response, Thailand has heightened its standards for imported steel and is considering additional trade protection measures to shield the domestic industry from adverse effects (see Kallanish passim).
Thailand's Response: Protecting Domestic Industries from the Influx of Chinese Goods
Thailand’s Foreign Trade Department has launched an anti-dumping investigation into the import of aluminium extrusions from China. This action comes in response to complaints from domestic steel manufacturers who argue that the increasing volume of imports is affecting local production.
Caretaker Commerce Minister Phumtham Wechayachai has announced that the ministry is launching an investigation as part of a broader effort to manage the growing influx of Chinese goods into Thailand. A ministry source, speaking anonymously, revealed that Phumtham has instructed relevant agencies to implement policies and measures to safeguard local industries.
“With the trade war happening, local steel operators are concerned about Chinese steel products being dumped in Thailand and Southeast Asia as China seeks other markets to offset declining steel exports to the US after tariffs were imposed.”
The Commerce Ministry is proactively pursuing trade remedies, including anti-dumping measures, countervailing duties, and safeguard actions, to counter import that pose a threat to the domestic sectors. These initiatives focus on implementing higher tariffs and anti-dumping duties, particularly steel products imported from China, Taiwan, Japan, the European Union, South Korea, and Vietnam.
A Balancing Act: Economic Growth vs. Protecting Local Businesses
Temu's rapid rise in Southeast Asia presents a complex challenge for governments in the region. On one hand, the platform offers consumers access to affordable goods, boosting purchasing power and driving economic growth. On the other hand, the threat posed to local businesses, particularly small and medium enterprises, cannot be ignored. As Temu's presence continues to expand, governments like Indonesia and Thailand face a balancing act between fostering a competitive market and protecting domestic industries. The coming months will be crucial in determining the future of Temu in Southeast Asia and the long-term impact it will have on the region's economy.
