Dark times for fast fashion. THE’Indonesia recently asked Google And Apple to remove the platform from their app stores, in a move that reflects the growing government concern about unfair competition of the Chinese e-commerce giants. The initiative, led by the Minister of Communications and IT Budi Arie Setiadiaims to protect small and medium-sized local traders from competition with low-cost products from China, sold through Temu, owned by Chinese conglomerate PDD Holdings.
Temu and the consumer-to-factory model
Temu is an e-commerce platform that directly connects consumers with Chinese factories, cutting out middlemen and significantly reducing product costs. This model, according to Setiadi, represents a form of “unhealthy competition” that could destabilize the local economy and endanger millions of small Indonesian businesses.
The app is not yet operational in Indonesia, but the government has taken preventive measures to prevent its spread. “We are not here to protect e-commerce, but small and medium-sized businesses. There are millions of people we must protect,” the minister declared. Unlike traditional platforms, which require the presence of intermediaries and distributors, Temu operates without any type of mediationbypassing local regulations and creating havoc among traders.
A national protection strategy
The decision to block Temu is part of a broader strategy by the Indonesian government, which last year forced TikTok to shut down its e-commerce function in the country to protect local merchants. The exponential growth of Chinese platforms is seen as one threat to the Indonesian economyin which e-commerce plays a crucial role.
According to a report, cited by Reuters, by Google, Temasek Holdings and Bain & Co, e-commerce in Indonesia is expected to grow from $62 billion in 2023 to reach $160 billion by 2030. This boom it represents a challenge but also an opportunity for local businesses, which face competition from international giants such as Temu.
The risks of low-cost products
In recent years, Indonesia has seen the closure of many textile factories and the layoff of thousands of workers due to growing foreign competition. To stem this trend, last July the government introduced import tariffs of up to 200% on various Chinese products, including clothing, electronics and ceramics.
The excessive influx of cheap goods from China has fueled fears that local production could be squeezed, leaving Indonesian traders unable to compete. The closure of factories and the loss of jobs, especially in the textile sector, are clear signs of a crisis.
Blocking Temu: a solution or just a palliative
While the decision to block Temu it was received positively by many local tradersthere are also concerns that this measure may not be sufficient in the long term. Globalization and the growth of e-commerce are unstoppable phenomena, and Indonesia will have to find more structured solutions to strengthen the competitiveness of its companies on the global market.
The blocking request could soon extend to other Chinese platforms such as Shein, which uses a similar business model. However, Shein stated that it does not yet have an official presence in Indonesia.
It remains to be seen whether Google and Apple will grant Indonesia’s request and block Temu in their app stores. The affair is just the latest in a series of measures taken by the government to create a “fair, healthy and beneficial e-commerce ecosystem” for its citizens.
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