BUSINESS

Temu Suffers First Big Setback as Vietnam Suspends Its Operations

Published: Dec. 17, 2024 3:53 a.m. GMT+8

00:00

00:00/00:00

Listen to this article 1x

Temu began its Southeast Asia expansion in mid-2023, launching in the Philippines, Malaysia, and Thailand.

Temu, the Chinese cross-border e-commerce platform owned by PDD Holdings Inc., has suffered its first major setback since launching in 2022 after Vietnam banned its operations citing regulatory non-compliance only two months after it entered the market.

Temu was ordered by the Ministry of Industry and Trade to stop using the Vietnamese language on its website and app, to notify customers that its e-commerce registration was under review, and to halt all marketing activities in the country, according to a report by Vietnam News Agency on Dec. 5.

You've accessed an article available only to subscribers

Subscribe today for just $.99.

VIEW OPTIONS

Unlock exclusive discounts with a Caixin group subscription — ideal for teams and organizations.

Subscribe to both Caixin Global and The Wall Street Journal — for the price of one.

Share this article

Open WeChat and scan the QR code

DIGEST HUB

Digest Hub

Back

Explore the story in 30 seconds

Temu, a Chinese e-commerce platform, was banned in Vietnam for regulatory issues, marking its first suspension since entering over 80 countries.
Vietnam's crackdown may protect local businesses, with new e-commerce regulations issued to enhance compliance and manage import-export processes.
Vietnam's e-commerce sector, the third-largest in Southeast Asia, saw 52.9% growth in 2023, with Shopee and TikTok Shop as major players. Temu faces regulatory challenges in Indonesia due to its factory-to-consumer model.

AI generated, for reference only

Who’s Who

PDD Holdings Inc.: PDD Holdings Inc. owns Temu, a Chinese cross-border e-commerce platform. Temu has faced regulatory issues in Vietnam, leading to a suspension. The company is known for its aggressive pricing strategy and has been expanding into Southeast Asia since 2023. It also faces legal challenges in Indonesia due to its factory-to-consumer business model. These developments indicate PDD Holdings' focus on international market growth despite regulatory hurdles.

Temu: Temu is a Chinese cross-border e-commerce platform owned by PDD Holdings Inc. It has faced its first major setback since launching in 2022, with Vietnam banning its operations for regulatory non-compliance. Temu's aggressive pricing strategy raises concerns about its impact on small businesses in Southeast Asia. The platform has faced legal challenges in registering in Indonesia due to its factory-to-consumer business model, leading to a ban there.

Shein: Shein, a Chinese e-commerce giant, started operating in Vietnam two years ago and temporarily disabled its Vietnamese-language site, although Vietnamese customers can still shop via its international website. Unlike Temu, Shein uses a direct-to-consumer strategy, avoiding similar regulatory issues. In November, both Shein and Temu were required to complete e-commerce platform registration by Vietnamese authorities.

Shopee: Shopee dominates Vietnam's e-commerce market with a 61% market share. This leading position is largely attributed to the country's rapid e-commerce growth, ranked as the third-largest in Southeast Asia after Indonesia and Thailand. The dynamics highlight Shopee's significant influence and competitive edge in Vietnam's expanding online shopping ecosystem.

TikTok: TikTok Shop in Vietnam, launched in April 2021, has quickly gained a 24% market share, driven by the country's enthusiasm for live-stream shopping. The platform has become a significant player in Vietnam's rapidly growing e-commerce sector, which posted a 52.9% growth in gross merchandise value in 2023. TikTok's multi-channel network agency founder, Li Ming, commented on the competitive landscape and the regulatory focus in Vietnam's market.

Yuancang Warehouse: Yuancang Warehouse is a logistics firm co-founded by Liu Wei. It operates in Southeast Asia but generates the least business in Vietnam compared to other markets in the region. Despite this, Liu highlights Vietnam's strong consumer demand and young, brand-conscious population as signals of vast growth potential for the e-commerce market.

AI generated, for reference only

What Happened When

2022：: Temu launched.

After 2022：: Temu failed several times to register its brand in Indonesia due to naming conflicts.

Mid-2023：: Temu began expanding into Southeast Asia, launching in the Philippines, Malaysia, and Thailand.

As of 2024：: Vietnam posted a 52.9% growth in gross merchandise value in 2023, becoming Southeast Asia's third-largest e-commerce market.

July 2024：: Temu filed its latest brand registration application in Indonesia.

Oct. 1, 2024：: Indonesia's minister of communication and information stated that Temu's business model threatens small businesses, and the ban on Temu remains in place.

By November 2024：: Both Temu and Shein were given a deadline to complete e-commerce platform registration in Vietnam.

Nov. 25, 2024：: Pham Minh Chinh, Vietnam's prime minister, issued a decree to strengthen e-commerce regulations in Vietnam.

Dec. 5, 2024：: Vietnam News Agency reported Temu was ordered to stop using the Vietnamese language on its website and halt all marketing activities.

AI generated, for reference only