Social media app TikTok has entered into a joint venture with Indonesian tech giant GoTo to relaunch its online shopping business in the country. The Chinese-owned firm, Bytedance, plans to invest over $1.5 billion (£1.2 billion) in Indonesia’s largest e-commerce platform, Tokopedia.
TikTok Shop had previously shut down in Indonesia in October to comply with new regulations in the region’s largest economy. With approximately 125 million users in Indonesia, TikTok aims to integrate TikTok Shop’s Indonesia business with Tokopedia by acquiring just over 75% of the e-commerce platform.
In a joint statement, the companies outlined that the strategic partnership would commence with a pilot period closely supervised by relevant regulators. The deal also includes a commitment to promoting Indonesian goods on both platforms and assisting small and medium-sized businesses in the country with their production and sales strategies.
The joint venture follows the Indonesian government’s ban on online shopping through social media platforms, designed to safeguard smaller merchants and users’ data. Indonesia’s vast population, with over 270 million people, constitutes a significant user base for social media platforms, including TikTok.
The ban, announced in October, aligns with President Joko Widodo’s cautionary stance on e-commerce, emphasizing the need for regulations to ensure its positive impact. Online retailing has experienced substantial growth in Indonesia, with the value of e-commerce sales projected to increase over six-fold between 2018 and the next year, reaching 689 trillion Indonesian rupiah ($44 billion; £35 billion), according to the country’s central bank.
TikTok Shop, launched two years ago, had been steadily expanding its market share in Indonesia’s online shopping market, which is dominated by platforms such as Tokopedia, Shopee, and Lazada. The regulatory challenges in Indonesia add to TikTok’s global scrutiny, with concerns raised in the US, European Union, and the UK, where the app has been banned from the network over security issues.
