E-commerce King Expelled
from Indonesia, Its Fate
is Increasingly Worrisome
Jakarta, CNBC Indonesia –The Temu application is banned from operating in Indonesia. The government argues that the e-commerce service from China has a business model that could kill local MSMEs.
The reason is, Temu sells goods directly from the initial producer to the end consumer without any intermediaries. This makes the price of goods very cheap and damages market prices.
PDD Holdings, the parent company of Temu, has also added to the difficulties in its hometown. Its fate is increasingly worrying after having dominated e-commerce services and carried out massive global expansion.
In the first quarter (Q1) 2025 report, PDD Holdings experienced a decline in profits and company shares.
First quarter net profit plunged 47% to 14.74 billion yuan (Rp. 33.3 trillion). This decline was because its platform experienced intense local competition, and also had to experience global trade.
“Domestic consumption is slowing, competition is intensifying, and global trade tensions are weighing on growth,” explained US Tiger Securities analyst Bo Pei, quoted from Reuters, Saturday (7/6/2025).
PDD does have to compete fiercely in China with other giants, namely Alibaba and JD.com. This has led to a price war to attract consumers to shop on their respective platforms.
Just like PDD, Alibaba’s fate is also not so good with its quarterly revenue missing estimates. Meanwhile, JD.com experienced an increase with the support of a trade-in program.
In the international market, Temu became a victim of the US-China trade war. Then experienced a de-escalation for 90 days.
This makes Temu’s business uncertain globally. PDD Chairman and Co-CEO Chen Lei also admitted that this situation was felt by platform traders.
“Radical changes in external environmental policies such as tariffs have created significant pressure on our traders,” he said.
Not long ago, the trade war also caused Chinese merchant sales in the US to be independently removed by Temu. The app only displays items that are sold only in the US or without the new tariffs announced by President Donald Trump last month.
But shortly after, Trump gave relief by cutting from 120% to 54% in the ‘de minimis’ category. The cut is specifically for the minimum tariff of US$100 (Rp1.6 million).
For information, ‘de minimis’ is a category for small, low-priced items sent using postal services to the US. Before the trade war between the two countries, products in this category were exempt from import duties if their prices were no more than US$800 (Rp13 million).
SOURCE : CNBC INDONESIA
