Temu supply chain expands in Southeast Asia amid Indonesian ban: Will others follow?
18 Oct 20243 min read
Summary
- Indonesia’s ban has turned low-cost, direct-from-China fulfilment into a regulatory flashpoint, highlighting government concerns over supply chain bypass and the displacement of small merchants.
- Temu’s uneven rollout across Southeast Asia reflects deeper trade-offs between rapid scale, local payments and logistics integration, and varying levels of regulatory tolerance.
- The platform’s reliance on a China-centric sourcing and fulfilment model remains a competitive advantage, but one increasingly constrained by domestic economic priorities and policy responses across the region.
Discount-shopping platform Temu is facing hurdles in Southeast Asia (SEA) following its recent ban in Indonesia in early October, disrupting the Temu supply chain.
Authorities in the country implemented the ban to protect micro, small and medium sized enterprises against cheap products on the platform. On October 11, Indonesia also asked Google and Apple to block Temu in their app stores to prevent the app from being downloaded.
According to the Indonesian government, Temu’s express delivery model kicks local players out of the supply chain. This is because it allows foreign companies to have extremely low prices that squeeze small traders in Indonesia.
Authorities in the country implemented the ban to protect micro, small and medium sized enterprises against cheap products on the platform. On October 11, Indonesia also asked Google and Apple to block Temu in their app stores to prevent the app from being downloaded.
According to the Indonesian government, Temu’s express delivery model kicks local players out of the supply chain. This is because it allows foreign companies to have extremely low prices that squeeze small traders in Indonesia.
Expanding into SEA
Despite the ban, the Temu supply chain continues to expand into other SEA markets. Recently, the platform launched in Vietnam and Brunei.
However, initial signs suggest that its entry into Vietnam may have been rushed. This is because the site currently only supports English and a limited number of payment methods, excluding popular Vietnamese mobile payment services like Momo.
Meanwhile, Temu’s local delivery in Brunei, a small but affluent market, appears more polished. Unlike Vietnam, the platform is available in English and Malay. Despite the nation’s small population limiting the potential scale of Temu’s express delivery, this highlights the company’s intent to build a supply chain in the region.
This approach to SEA highlights the Temu’s supply chain challenge – a highly competitive region dominated by established players like Shopee and Lazada. Although Temu has seen global success, its low-cost-china-made-goods and direct-from-China supply chains are facing stiff competition.
According to a report from market insight provider Cube Asia, Temu’s products are primarily unbranded Chinese goods. Branded items make up just 12% of their selection making it cheap.
However, Temu has only recently entered SEA through the Philippines, Malaysia, Thailand, Vietnam and Brunei. Notably, its gross merchandise volume was low compared to local players in the region according to Momentum Ventures last year
However, initial signs suggest that its entry into Vietnam may have been rushed. This is because the site currently only supports English and a limited number of payment methods, excluding popular Vietnamese mobile payment services like Momo.
Meanwhile, Temu’s local delivery in Brunei, a small but affluent market, appears more polished. Unlike Vietnam, the platform is available in English and Malay. Despite the nation’s small population limiting the potential scale of Temu’s express delivery, this highlights the company’s intent to build a supply chain in the region.
This approach to SEA highlights the Temu’s supply chain challenge – a highly competitive region dominated by established players like Shopee and Lazada. Although Temu has seen global success, its low-cost-china-made-goods and direct-from-China supply chains are facing stiff competition.
According to a report from market insight provider Cube Asia, Temu’s products are primarily unbranded Chinese goods. Branded items make up just 12% of their selection making it cheap.
However, Temu has only recently entered SEA through the Philippines, Malaysia, Thailand, Vietnam and Brunei. Notably, its gross merchandise volume was low compared to local players in the region according to Momentum Ventures last year
Will SEA follow Indonesia’s lead?
Despite Indonesia’s decision to ban Temu, industry analysts suggest that this move is unlikely to trigger similar actions across SEA in the near future.
Indonesia’s regulators have specifically targeted cross-border e-commerce platforms to prevent an oversupply of cheap goods that could harm local industries. However, to experts, SEA has different economic and regulatory environments that reduce the likelihood of similar measures to the Temu supply chain.
Indonesia’s regulators have specifically targeted cross-border e-commerce platforms to prevent an oversupply of cheap goods that could harm local industries. However, to experts, SEA has different economic and regulatory environments that reduce the likelihood of similar measures to the Temu supply chain.
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“Indonesia’s economic structure is unique, with MSMEs serving as a backbone of the economy and a major source of employment, which draws particular attention from the government,” said Li Jianggan, CEO of Singapore-based Momentum Works in South China Morning Post.
According to the country’s Coordinating Ministry for Economic Affairs, more than 64 million MSMEs contribute over 60% to Indonesia’s GDP and account for 97% of the country’s employment, making their protection a national concern.
Li further noted that while Indonesia has implemented these strict measures, “the ban on Temu and other cross-border e-commerce platforms is not likely to trigger a domino effect across other Southeast Asian countries over the near term,” as governments in the region face varied economic considerations and regulatory priorities.
In contrast, Temu is still available in countries like the Philippines, Malaysia, Thailand, Vietnam, and Brunei, albeit without significant market penetration. “Its presence in Southeast Asia has not been particularly aggressive,” Li said, indicating that the platform’s strategy and impact differ from country to country.
Li further noted that while Indonesia has implemented these strict measures, “the ban on Temu and other cross-border e-commerce platforms is not likely to trigger a domino effect across other Southeast Asian countries over the near term,” as governments in the region face varied economic considerations and regulatory priorities.
In contrast, Temu is still available in countries like the Philippines, Malaysia, Thailand, Vietnam, and Brunei, albeit without significant market penetration. “Its presence in Southeast Asia has not been particularly aggressive,” Li said, indicating that the platform’s strategy and impact differ from country to country.