Chinese internet marketplace Temu has had rapid global expansion thanks to its attractive and frequently ridiculously low-cost product line, but as it looks to expand into new areas in Southeast Asia, these low-cost strategies are encountering more and more resistance.

In October, Indonesia issued an order to remove Temu from app stores, claiming that this would safeguard the nation's tiny retailers. Vietnam threatened last week to ban Temu and Shein, another Chinese-owned fast-fashion retailer, by the end of the month because they were not authorized to conduct business there.

According to Simon Torring, co-founder of market research firm Cube, local manufacturers and sellers have suffered because they are unable to match the speed, quality, or prices given online by the influx of cheaper Chinese-made goods, which frequently come with low import tariffs.

He claimed that Temu has turned into a lightning rod for regulators worldwide who are now concerned about changing the laws governing cross-border imports.


Because so many suppliers have gone out of business, Poom Chotikavan, director of operations at Taksa Toys in Thailand, has had difficulty finding a local manufacturer to produce toys for kids. According to Reuters, increased Chinese competition and rising costs contributed to the closure of about 2,000 Thai enterprises in all industries and the loss of over 50,000 jobs during the most recent fiscal year.


According to Chotikavan, "sourcing products from China has never been easier, so their sales have just been obliterated." "How are they going to make it in this environment where their customers can simply contact [Chinese] factories?"

Pinduoduo, Temu's Chinese counterpart, has been in business since 2015. The worldwide platform will debut in the US in 2022 and take over European markets the following year. Beginning in 2023 with the Philippines and Malaysia, Temu has been growing its footprint in south-east Asia. This year, it will also be present in Thailand, Brunei, and Vietnam.

According to a Bain & Co. report released in November, online retail sales in south-east Asia are expected to reach $160 billion in 2024, reflecting the region's booming middle class and rising consumerism.

According to Jianggan Li, CEO of venture capital firm Momentum Works, that boom coincided with Temu's pursuit of global expansion while domestic consumers reduced their purchases of Pinduoduo due to a faltering Chinese economy.

“China is very competitive, but growth is stagnant compared to the 2010s, so players need to find other avenues to grow [like] overseas markets,” he said.

However, the slowdown has also freed up capacity in Chinese factories, which forces Temu's primary suppliers to sell in bulk at inexpensive prices, boosting the market as it makes inroads.

Astonishingly low price.

Temu combined those low-quality products with steep discounts and a more aggressive marketing strategy, just like it does in western markets. Temu also kept customers interested with a gamified experience that included countdown timers and prize wheels.

Chotikavan, who purchased a MagSafe iPhone holder for his car on Temu for $3—less than a seventh of the price it would have normally cost—is one of the hundreds of thousands of clients it has touched.

He claimed that although the products are becoming much less expensive, the quality is still respectable. "It's incredibly inexpensive."

Throughout Southeast Asia, the situation is the same. In Indonesia, local traders sell woven straw satchels that cost $3 on Temu for six times the price. Temu offers jackets that retail for $15 in Vietnamese marketplaces for the same price plus free shipping.

Local companies urge their governments to take action, while consumers like having more access to affordable items.

With higher taxes and a 2023 ban on social media e-commerce, Indonesia has taken the toughest stand, forcing TikTok Shop to acquire a faltering local rival in order to stay in business. According to Torring, who cited the platform's repeated bids to enter Indonesia despite repeated rejections, Temu would try to force its way in even though a ban would safeguard local manufacturers and increased taxes would increase government coffers.

It's telling other markets that we'll come if it's simple. We will still come even if it is difficult. We would come, he responded, "but you show us the guidelines and what we must do."