Temu's rapid global expansion briefly helped its owner, U.S.-listed PDD, become China's most valuable e-commerce company, overtaking longtime leaders Alibaba and JD.com. (Photo: Reuters)
Flood Cheap Chinese products The entry of Chinese online retailers into Thailand is expected to further expand. TEAM Back to Hometown E-commerce Monday market.
The move is expected to intensify price competition in the local e-commerce market, affecting Lazada, Shopee and TikTok, as well as raising concerns about the possible closure of local factories.
E-commerce industry leaders say the Thai government needs to do more to curb the influx of Chinese products, especially substandard and illegal cross-border goods, while local small and medium-sized businesses should stop importing and selling Chinese products to avoid losses.
Temu Thailand application offers 90 days free product returns, up to 90% product promotion discounts, and a set of discount coupons worth 70 baht.
Alessandro Pisini, co-founder of e-commerce support specialist CREA Asia and former chief executive officer of Thailand's Lazada, said Tem's entry would increase competition in cross-border sales.
“We expect to see a significant increase in market share for cross-border goods, especially in fashion and lifestyle home goods. [shipped directly from China]”Brands will probably come in later as they focus on TikTok first, but it will be interesting to see how this plays out with live commerce,” he said.
The sources, who asked not to be named, said Southeast Asia is a key destination for Chinese e-commerce traders as they need to find more export markets while facing tough regulations in the United States and Europe.
Temu's parent company is Chinese e-commerce giant PDD Holdings, whose other platform, Pinduoduo, specializes in cost-effective group buying.
Temu's rapid global expansion at one point last year saw U.S.-listed PDD overtake longtime leaders Alibaba and JD.com to become China's most valuable e-commerce company.
Pawoot Pongvitayapanu, honorary chairman of the Thai E-Commerce Association, said Tem is like a factory that sells directly to consumers. The company focuses on low-cost products rather than branded goods. For example, it offers products priced at 10 baht with no marketing costs.
In this tough economic climate, low-priced products will attract buyers and have an impact on local small businesses. For example, paper napkins are sold for 20 baht, while their Thai counterparts cost 60 baht.
“We can expect more factory closures and a massive influx of millions of Chinese products,” Paut said.
Subsidized Prices
The company also benefits from subsidized pricing with discount promotions and local support, fast delivery from China to Bangkok within five days and favourable baht rates, which will help attract the next wave of Chinese products into Thailand, he added.
Mr Pawoot added that the Thai government needs to take further steps to crack down on illegal cross-border products and tighten import standards to promote quality products and ensure fair competition for domestic small and medium-sized enterprises.
More importantly, policymakers must strictly vet Chinese candidates setting up businesses in Thailand.
PriceThe Group chief executive officer Thanawat Marabuppa said PDD, through Tem, has launched a range of products made in its Chinese factories into the global market, and has expanded into overseas markets in the US, followed by Europe in 2022. It expanded into Southeast Asia in the Philippines and Malaysia last year.
Temu supports more local languages and has a larger network ecosystem, making it more successful in international markets than Alibaba's Ali Express.
“We expect to see a large amount of unbranded Chinese products being sold in Thailand with heavy promotions and discounts. Temu will then open TemuMall, which will stock branded products, similar to Shopee,” Mr Thanawat added.
He said the government should impose stricter import measures, especially tariffs on products priced below 1,500 baht.
The government this month introduced a 7% value-added tax on all imported goods priced below 1,500 baht to help local businesses struggling to compete with cheaper products, mainly from overseas.
Mr Thanawat warned that local small and medium-sized enterprises importing Chinese products should be careful and stop selling those products to avoid losses.
Kultirat Pakhawakkrilas, chief executive officer of the Thailand Electronic Business Centre (TeC) and chairman of the Thai E-Commerce Association, said the Thai market has great potential.
“But compared to Indonesia and Vietnam, the cost per DAU is [direct active user] “It's the most expensive of them all,” he said. “That's why other big e-commerce platforms like Kuaishou haven't decided to come here yet.”
Mr Tem added that he chose Thailand because consumers prefer the lowest prices for products.
The company already has operations in other countries in the Asia-Pacific region, such as Australia, making it easier for it to expand here.
Temu plans to target consumers on Shopee and Lazada, as well as shoppers on Ali Express and Amazon.
The company's motto is “Shop like a millionaire,” meaning they want shoppers to feel like they have an unlimited budget because they have the best offers, Kultiras said.
Mr Kultirat said TeC and the Thai E-Commerce Association could help local small and medium-sized enterprises enter the Hong Kong and Chinese markets.
Alex Ng, chief executive officer of Kerry Express (Thailand) Ltd, said Tem is another player that could disrupt Lazada, Shopee and TikTok.
This will drive e-commerce volume to new levels but also push product prices and logistics costs to new lows, and J&T and Flash are expected to suffer new price wars.
Kerry Express will continue to serve e-commerce platforms but will focus on the luxury market and international parcels, Ng said.
Damping effect
Sittipol Viboonthanakul, chairman of parliament's economic development committee, said Tem was a growing company with big capital and could not be ignored.
Temu offers products that are 80-90% cheaper than the US market, and its user base in the US has grown from 5 million to 100 million.
“We plan to leverage our price and service to attract Thai online shoppers,” he added.
In the short term, governments should seriously enforce local product standards and safety measures for consumers.
He said in the long term, the government needs to study tax measures in the United States, Europe and Indonesia, and the Trade Competition Commission of Thailand and the Electronic Commerce Development Authority need to take legal action to address the issue before it collapses the local economy.
“We propose the establishment of a subcommittee to monitor illegal cross-border capital and promote the application of local standards on imported goods,” Mr Sittipol said.
Relatedly, hundreds of merchants rallied at the PDD Holdings office in Guangzhou on Monday to protest against unfair fines imposed by Tem, Bloomberg reported.
The protest was the culmination of growing discontent among retailers and third-party distributors who feel PDD is increasingly squeezing their profits as the company embarks on a costly global expansion.
The people said their complaints centered on PDD's practice of withholding payments from merchants it deems to have failed to meet customer expectations, which could include anything from missing delivery deadlines to inconsistencies in product listings.
