‘No China-Made Goods Here!’ The Country That Slammed the Door on Temu

Indonesia is maintaining its block on the Chinese e-commerce platform Temu to protect its local small and medium-sized enterprises (SMEs).

The Indonesian government has been preventing Temu from entering the market since its application in 2022 and is expected to continue this stance. In a recent statement, Budi Arie Setiadi, Indonesian Minister of Communication and Information Technology, explained that Temu’s presence could potentially harm the country’s economy, particularly its small and micro-enterprises. He emphasized that the government would not allow any flexibility on this issue.

Setiadi emphasized the need to ensure that the country’s online marketplace supports productivity and profitability for local businesses, warning that “this is unhealthy competition that can threaten the sustainability of our MSMEs.”

Since September 2022, Temu has made three attempts to register for entry into the Indonesian market, but each application has been rejected. Piki Satari, an advisor at the Ministry of Cooperatives and SMEs, explained that Temu’s recent registration was denied because a local company uses the same trademark.

The Indonesian Ministry of Trade also raised concerns about Temu’s business model, which directly connects Chinese manufacturers with consumers, bypassing local intermediaries and distributors. Officials pointed out that Temu’s business model eliminates local sellers and delivery companies, allowing foreign firms to squeeze local SMEs to maintain lower prices.

In June, Teten Masduki, Minister for Cooperatives and Small and Medium Enterprises, mentioned that Temu poses a greater threat than TikTok Shop, the e-commerce arm of the video platform owned by China’s ByteDance. TikTok Shop entered the Indonesian market in 2021 and experienced rapid growth. However, the Indonesian government effectively halted its operations last year by prohibiting sales on social media to protect the local e-commerce sector.

In response, TikTok invested $1.5 billion in Tokopedia, Indonesia’s largest e-commerce company, and became the majority shareholder to resume its local online shopping operations.

Temu launched its services in the U.S. in September 2022 and has since expanded globally. It has expanded to over 70 markets worldwide, including Korea. Recently, it also started operations in Thailand, further expanding into the Southeast Asian market.