Hanoi, Vietnam – In a coordinated move, Southeast Asian nations have escalated regulatory measures against Chinese cross-border e-commerce platforms, most notably Temu and SHEIN. Following Indonesia’s ban in October 2024, Vietnam has suspended operations for these platforms, raising significant concerns over the impact of these giants on local small and medium-sized enterprises (SMEs). Analysts warn that these platforms undermine local businesses by offering goods at drastically lower prices, often bypassing domestic regulations, as reported by Voice of America.
The rapid expansion of both platforms into Southeast Asia is a result of the region’s rising middle class, increasing internet penetration, and growing consumer reliance on e-commerce, particularly in the wake of the COVID-19 pandemic.
The Emergence of Temu and SHEIN in Southeast Asia
Temu, launched in the United States in September 2022 as a subsidiary of Pinduoduo, was designed to directly connect consumers to suppliers in China, cutting out intermediaries to offer lower-priced goods. According to The Guardian, this model has made Temu highly attractive in Southeast Asia, with its aggressive pricing strategies rapidly capturing market share.
Meanwhile, SHEIN, founded in 2008 as a wedding dress retailer, pivoted to fast fashion and gained international fame for trendy, low-cost clothing. With its strong presence in global markets, SHEIN has faced challenges in Vietnam, temporarily withdrawing its website while working to comply with local regulatory requirements.
However, local governments have begun responding to concerns over the adverse effects on domestic SMEs, which are struggling to compete with the ultra-low prices and fast delivery systems of these Chinese platforms.
Regulatory Measures and Market Impact
In October 2024, Temu launched in Vietnam, quickly attracting customers with significant discounts and promotions. However, the platform’s operations were swiftly suspended after it failed to meet the Ministry of Industry and Trade’s business registration requirements. This abrupt shutdown left many Vietnamese consumers in limbo, especially those who had prepaid for orders, heightening dissatisfaction and leading to complaints over consumer rights.
SHEIN has also faced regulatory hurdles in Vietnam, leading to its temporary withdrawal from the market as it works to address local compliance concerns. Despite these setbacks, both platforms continue to exert pressure on local markets by offering products at far lower prices than domestic alternatives.
Concerns Behind the Bans: A Deeper Dive
Several key factors have contributed to the decision by Indonesia and Vietnam to ban or restrict the operations of Temu and SHEIN:
Threat to Local SMEs: The most pressing concern is the significant threat these platforms pose to local small and medium-sized businesses. Their ability to offer low-cost goods, often through direct shipments from China, undercuts local businesses that cannot compete with such pricing strategies, thus threatening the survival of domestic enterprises.Regulatory Non-Compliance: Both Temu and SHEIN have faced scrutiny for their failure to comply with local laws. Temu’s suspension in Vietnam, for example, resulted from missing a crucial registration deadline, highlighting the platforms’ disregard for local regulatory frameworks.Product Quality and Safety: The quality of products sold by these platforms has raised concerns among policymakers. There are fears that the influx of Chinese goods could overwhelm local markets with counterfeit or substandard products, putting consumers at risk and damaging market integrity.Market Disruption: Local governments fear that unchecked access to these platforms could lead to market saturation with low-quality goods, displacing existing businesses and destabilizing regional economies.Domestic Pressure: Growing complaints from local retailers about unfair competition have prompted governments in Southeast Asia to implement measures to protect local industries and maintain economic stability.
Chinese Companies Disrupting Local Markets
The growing trend of protectionism in Southeast Asia is evident as countries like Indonesia and Vietnam have taken drastic steps to protect their economies from foreign e-commerce platforms. Analysts such as Alicia García-Herrero from Natixis argue that these bans reflect broader concerns about Chinese companies disrupting local markets and eroding the competitiveness of domestic SMEs.
The U.S. has also intensified scrutiny on Temu and SHEIN, accusing them of exploiting the “de minimis exemption” that allows duty-free entry for imports valued under $800. This exemption has led to a surge in shipments from China, complicating the enforcement of U.S. trade laws and safety standards. While Temu claims its business model is not dependent on this exemption, and SHEIN calls for reforms to ensure fair competition, the regulatory actions in both the U.S. and Southeast Asia could significantly affect its ability to maintain its competitive pricing edge.
A Delicate Balance: Protecting Local Industries While Promoting Innovation
The bans on Temu and SHEIN have ignited a broader debate about the future of e-commerce and local industries. Southeast Asian governments must navigate the complexities of fostering competitive, innovative markets while ensuring consumer protection and safeguarding the interests of domestic businesses. There is an increasing need for governments to refine their regulatory frameworks to strike a balance between encouraging foreign investments and protecting local economies from monopolistic practices.
As the situation evolves, Southeast Asian nations must continue to assess their strategies for promoting resilient and competitive markets. Strengthening customs inspections, tightening border regulations, and enforcing adherence to local business laws will be critical in mitigating the disruptive effects of cross-border e-commerce giants. Additionally, fostering international cooperation on e-commerce regulations and consumer protections will be essential to navigating the challenges of an increasingly interconnected global marketplace.
The regulatory measures against Temu and SHEIN are just the beginning, as analysts speculate that other Southeast Asian nations may soon follow suit. The challenge for these countries will be to protect local businesses from the overpowering influence of foreign e-commerce platforms while ensuring that their markets remain open and competitive in a rapidly evolving digital economy.
Southeast Asia Cracks Down on Chinese E-commerce Giants Temu and SHEIN Amid SME Concerns world-news World News | Latest International News | Global World News | World Breaking Headlines Today
