ByteDance Ltd.’s TikTok is in talks to invest into a unit of Indonesia’s GoTo Group, one of several options the Chinese company is weighing to try and restart its online shop in its biggest e-commerce market.
The companies are working on a potential investment into GoTo’s online-retail unit Tokopedia, which could be finalized in the coming weeks, people with knowledge of the matter said. Instead of a direct investment, the deal could take the form of a joint venture between the two firms, said one of the people, who asked not to be identified as the information is private.
The discussions also involve the two companies jointly building a new e-commerce platform, the people said. That arrangement is designed to address regulatory hurdles and let TikTok revive its online-shopping service in Southeast Asia’s largest retail arena.
Indonesia in September announced sweeping regulations that forced TikTok to split payments from shopping in the country — an unprecedented separation that put a dent in the social media company’s e-commerce thrust just as it was gaining traction against Sea Ltd. and GoTo. TikTok, the only platform immediately affected by the rule, halted online shopping in Indonesia shortly after to comply with the curbs.
Read more: TikTok’s E-Commerce Ambitions Stall as Global Backlash Grows
Deliberations for a deal are ongoing and talks could still fall apart, the people said. A pact would also be subject to regulatory approval, they said. A direct investment into Tokopedia, Indonesia’s largest local e-commerce player, might help to further smoothen relations with the government, one of the people said.
TikTok didn’t respond to a request for comment, while a GoTo representative declined to comment.
Owned by Beijing-based ByteDance, TikTok has been trying to chart a new path for its fastest-growing feature, TikTok Shop, in a country of 278 million that was supposed to be a template for a global expansion from the US to Europe.
For GoTo, Indonesia’s largest internet company, a deal with TikTok could be risky as it would help a major online-retail rival to keep operating in the country. But it would also give GoTo a strong global social-media partner in an arrangement that could boost shopping and payments volumes for both companies.
TikTok has been attempting to engage government officials and other social media companies to figure out a way to restart its e-commerce operations in the country. Last week, Indonesian minister Teten Masduki said TikTok has spoken with five companies including Tokopedia, PT Bukalapak.com and Blibli for possible partnerships.
Indonesia is the first and largest market for TikTok Shop, and online shopping has become the social media app’s fastest-growing feature with a burgeoning fan base in the country. TikTok started the shopping feature in Indonesia in 2021 and its instant success has encouraged it to expand into online retailing in other markets, including the US.
Indonesia is among the first countries in Southeast Asia to push back against TikTok. Navigating the conflict will be pivotal for the company as governments across the world assess how Southeast Asia’s largest nation moves to curb the social media giant’s burgeoning e-commerce presence, just months after the firm said it will invest billions of dollars into the region.
Following the Indonesia restrictions, nearby Malaysia said it is studying the possibility of regulating TikTok and its e-commerce operations. The social media giant is already facing possible bans and scrutiny in the likes of the US, Europe and India on national security concerns.
Author: Olivia Poh, Faris Mokhtar and Dong Cao