TikTok announces billion dollar investments in Southeast Asia to exploit e-commerce

TikTok said on Thursday it will invest billions of dollars in Southeast Asia over the next few years as it doubles down on the region amid intensifying global scrutiny over its data security.

"We're going to invest billions of dollars in Indonesia and Southeast Asia over the next few years," Reuters quoted TikTok CEO Shou Zi Chew as telling a forum the Chinese-owned short video app organized in Jakarta to highlight the social and economic impacts of the app in the region.

TikTok did not provide a detailed breakdown of the spending plan, according to Reuters, but said it would invest in training, advertising and supporting small vendors looking to join its e-commerce platform TikTok Shop.

Chew said content on its platform was becoming more diversified as it adds more users and expands beyond advertising into e-commerce, allowing consumers to purchase goods through links on the app during livestreaming.

TikTok has 8,000 employees in Southeast Asia, and 2 million small vendors selling their wares on its platform in Indonesia, the region's biggest economy, he was quoted a saying by Reuters.

TikTok facilitated $4.4 billion of transactions across Southeast Asia last year, up from $600 million in 2021, but it still trailed far behind Singaporean heavyweight Shopee's $48 billion of regional merchandise sales in 2022, according to Momentum Works. The international consultancy’s data shows e-commerce transactions across the region reached nearly $100 billion last year, with Indonesia accounting for $52 billion.

In Vietnam, regulators probed TikTok's operations in mid-May, targeting “toxic” content after reports that TikTok users arbitrarily used private and personal images to spread fake news, smears, and insults. Vietnam’s Ministry of Information and Communications (MIC) said earlier this month it had discovered the platform’s infringements, and would continue to inspect TikTok’s activities this month.

The number of TikTok users in Vietnam has increased to 50 million, according to international consultancy DataReportal. TikTok is owned by China's ByteDance.

The leading e-commerce platforms in Vietnam – namely Shopee, Lazada, Tiktok Shop, Tiki, and Sendo – posted total revenue of VND39 trillion ($1.66 billion) in the first quarter of 2023, up 21.8% year-on-year, according to local e-commerce analyzer Metric.vn.

In the first quarter, 412,769 sellers recorded orders for 390 million products. Singapore-headquartered Shopee took the lead with revenue of VND24.7 trillion ($1.05 billion) for 289.7 million items, followed by Lazada with VND7.5 trillion ($319.3 million) and 55.2 million products, and TikTok Shop with VND6 trillion ($255.4 million) and 42.1 million goods, the analyzer’s data shows.

Vietnam has a population of 100 million, while Indonesia is home to around 282 million – Southeast Asia’s largest. The population across the whole region is about 630 million.