Bandung, IndonesiaSentinel.com — Minister of Cooperatives and SMEs (Kemenkop UKM) Teten Masduki spoke out regarding Temu Apps from China, which has registered to operate in Indonesia. Said to be an MSME killer app, it is necessary to think about the impact of Temu on Indonesian industry and MSMEs. One of the impact is massive layoffs within domestic industry and the dying of MSME that could possibly happen following the Apps operation in Indonesia.
Temu Apps, a rapidly growing e-commerce app, has taken the U.S. and European markets by storm, gaining a strong foothold among consumers with its unique business model and competitive pricing strategy. Offering an extensive range of products, from fashion to electronics, at astonishingly low prices, Temu has emerged as a leader in the highly competitive online retail space.
Temu is an app launched by the Chinese-based company PDD Holdings, entered the market with the promise of offering high-quality products at a fraction of the cost found on other platforms like Amazon and eBay. The app’s user interface is simple and intuitive, making it easy for shoppers to navigate and purchase items with just a few taps.
Temu leverages a vast network of suppliers, many of whom are based in China, allowing the app to offer a wide variety of products at significantly lower prices than its competitors.
Temu Apps Business Model
Temu’s success can largely be attributed to its unique business model, which prioritizes cost efficiency and direct sourcing. By cutting out middlemen and connecting directly with manufacturers, Temu is able to reduce overhead costs and pass the savings on to consumers. The company operates on a “low-margin, high-volume” strategy, relying on large-scale sales to drive profitability rather than high markups on individual products.
Temu also employs a strategy known as “group buying,” which encourages users to team up with friends or other app users to purchase products in bulk, thereby unlocking additional discounts. This social shopping model, popularized by Temu’s parent company in China, has proven highly effective in engaging price-sensitive consumers in the West.
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Moreover, Temu’s integration of advanced logistics and supply chain technology allows for streamlined operations, further reducing costs. The company’s fulfillment centers are strategically located near major shipping routes, enabling faster and more efficient deliveries compared to many competitors.
Impact on Indonesia
One of the biggest impacts posed by Temu’s presence in Indonesia is the pressure it places on local manufacturers and retailers, particularly micro, small, and medium-sized enterprises (MSMEs). Many domestic industries, especially in sectors such as fashion, home goods, and electronics, would struggle to compete with the ultra-low prices offered on the platform. Following the industry’s struggle to compete, this could lead to many worker reductions and massive layoffs.
MSMEs would also be hit by the shift in consumer behavior. Temu’s low price and variety of products are increasingly bypassing local stores in favor of the convenience and affordability the platform offers. This has led to declining revenues for many local businesses and a lead to bankruptcy, particularly those that cannot compete on price.
The President and Director of Smesco Indonesia, Wientor Rah Mada, called Temu an e-commerce application that kills MSMEs. In fact, he said, this application has attacked the United States and European markets with price subsidies of up to 100%, or consumers only pay for shipping costs.
This application is a malicious application from China, which if allowed to enter the country, then our MSMEs will definitely die. If these goods come directly from factories in China, then there are no sellers, no resellers, no dropshippers, and no affiliates. So there are no tiered commissions like other e-commerce
(Raidi/Agung)
