Temu, a Chinese online marketplace known for its deep discounts and viral marketing, has been facing increasing challenges as it attempts to expand its foothold in south-east Asia. These cut-price tactics have met roadblocks as regulators move to protect the livelihoods of local vendors. Indonesia recently ordered Temu to be taken down from app stores in October, a step intended to safeguard the country’s smaller merchants.
Last week, Vietnam threatened to ban Temu and fellow Chinese-owned fast-fashion outlet Shein by the end of the month, stating that neither had been approved to conduct business in the country. The influx of cheaper Chinese-made products, often imported with minimal taxes, has severely affected local vendors and manufacturers. These local businesses find it hard to compete with the speed, quality, and prices offered online, according to Simon Torring, co-founder of market insights firm Cube.
“Temu has become the lightning rod for every regulator, everywhere now getting worried about whether cross-border import rules should be changed,” he said. Poom Chotikavan, director of operations at Taksa Toys in Thailand, expressed difficulties in finding local manufacturers due to competition from Chinese suppliers. Nearly 2,000 Thai factories closed, and over 50,000 workers lost their jobs in the last financial year partly due to increased Chinese competition and rising costs, according to Reuters.
“It’s never been easier to source products from China, so their sales have just been obliterated,” Chotikavan said. Temu’s Chinese counterpart, Pinduoduo, has been operational since 2015. The global platform launched in the US in 2022 and later expanded into European markets.
This year, Temu has expanded its presence in south-east Asia, beginning with the Philippines and Malaysia, followed by Thailand, Brunei, and Vietnam. The growing consumerism from south-east Asia’s burgeoning middle class has made the region an attractive market, with online shopping sales expected to reach nearly $160bn in 2024, according to a Bain & Co analysis.
Temu’s expansion faces local backlash
This growth came at an opportune moment for Temu to pursue international expansion as a slowing Chinese economy caused domestic customers to reduce their Pinduoduo purchases, according to Jianggan Li, chief executive at venture firm Momentum Works. “In China, the growth is stagnant compared to the 2010s and yet it’s very competitive, so players need to find other avenues to grow such as overseas markets,” he said. The economic slowdown has also left Chinese factories with excess capacity, enabling Temu’s main suppliers to sell at high volumes and low costs, boosting the marketplace as it expands.
Temu has combined its cheaply produced goods with massive discounts and aggressive advertising campaigns, keeping shoppers engaged through features like prize wheels and countdown timers. It has reached hundreds of thousands of customers, including Chotikavan, who purchased a MagSafe iPhone holder for his car from Temu for $3—a fraction of its usual cost. “The products are getting way cheaper, but the quality is quite decent,” he said.
“It’s mind-blowing how cheap it is.”
In south-east Asia, products like woven straw satchels are available on Temu for significantly less than local vendors’ prices. Consumers benefit from the access to inexpensive goods, but local businesses are pushing for government action. Indonesia has taken a strong stance, increasing taxes in 2023, which forced TikTok Shop to buy into a struggling local competitor to continue operating.
Despite these regulatory challenges, Temu remains determined to enter new markets. The platform’s repeated applications to enter Indonesia despite repeated refusals signal its perseverance. “It’s signalling to other markets: ‘if it’s easy, we will come.
If it’s hard, we will still come. You show us the rules, you show us what we need to do, but we will come,'” Torring said. “Their mandate is ‘take the world’.”
