The collaboration between TikTok, the popular social media platform, and Indonesian tech behemoth GoTo has resulted in a joint venture aimed at relaunching TikTok’s online retail operations within the nation. As part of this initiative, the company, which is under the umbrella of China’s Bytedance, has committed to a substantial investment exceeding $1.5 billion (£1.2 billion) into Tokopedia, Indonesia’s leading e-commerce platform, over the long run.
The temporary closure of TikTok Shop in Indonesia occurred in response to the implementation of fresh regulations in the largest economy of Southeast Asia. However, this new partnership signifies TikTok’s strategic return to the Indonesian market. Notably, Indonesia boasts approximately 125 million users of the TikTok platform.
As part of the agreement, TikTok is set to acquire slightly over 75% ownership of Tokopedia, merging TikTok Shop’s operations in Indonesia with the platform. The collaboration, outlined in a joint statement by both companies, will kick off with a trial phase closely coordinated with regulatory oversight.
In a concerted effort, GoTo and TikTok have pledged to showcase Indonesian products on their respective platforms, aiming to support the growth of small and medium-sized enterprises (SMEs) by enhancing their production and sales strategies.
This arrangement follows Indonesia’s government prohibition on social media-based online shopping, intended to safeguard smaller merchants and users’ data privacy. Prior to the ban’s enforcement in October, Indonesia’s substantial population of over 270 million people actively engaged in social media, representing TikTok’s primary market for online retail.
The ban announcement coincided with President Joko Widodo’s cautionary remarks in September about the need for careful regulation in the realm of e-commerce. Indonesia’s online retail sector has witnessed a significant surge in recent years, with the country’s central bank forecasting a six-fold increase in e-commerce sales from 2018 to the upcoming year, reaching 689 trillion Indonesian rupiah ($44 billion; £35 billion).
Having entered Indonesia’s online shopping market just two years ago, TikTok Shop had been steadily expanding its market share in a landscape dominated by platforms like Tokopedia, Shopee, and Lazada.
Indonesia’s regulatory measures pose yet another challenge for TikTok, which has encountered scrutiny in various regions, including the US, European Union, and the UK, where security concerns led to the app’s banishment from parliamentary networks.