Will TikTok’s GoTo gambit save its Indonesian business?
The more the world’s youngsters love TikTok’s viral videos, the more their elected elders hate the app. They decry it for supposedly corroding young minds and, worse, for its links to China, home to its parent company, ByteDance. Many in America want to ban it. India already has. In October Indonesia, another big and promising market, shut down TikTok’s fledgling but lucrative sideline of selling goods via its videos, by requiring social-media firms to obtain an e-commerce licence—with no guarantee of success.
Such obstacles have forced TikTok to act strategically, for instance by moving its global headquarters to Singapore and hiring a Singaporean chief executive, which has put distance between it and its Chinese parent. In another canny move, on December 11th it announced that it was paying $840m for a 75% stake in Tokopedia, the e-commerce arm of GoTo, an Indonesian tech conglomerate. It has also pledged to invest $1.5bn in the tie-up.
The deal is something of a shotgun marriage, but it benefits both sides. GoTo, which has struggled to turn a profit in recent years, will no longer need to subsidise its loss-making retail arm. TikTok, for its part, will be allowed to restart its e-commerce operations. Sales on TikTok’s app will be fulfilled by Tokopedia’s logistics network (though, like all e-merchants in Indonesia, it must now charge minimum prices for products made abroad).
2023-12-14 09:06:18
Article from www.economist.com
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