On Thursday, TikTok, the short-form video app owned by China's ByteDance, announced plans to make a major investment in Southeast Asia in the coming years.
With a combined population of 630 million, half of whom are under the age of 30, Southeast Asia is a very important market for TikTok. More than 325 million active users visit the app in the region every month.
In an ongoing effort to expand TikTok's reach, Chew Shou Zi, the company's CEO, revealed that the app has successfully provided a platform for more than 15 million small businesses in Southeast Asia, including five million in Indonesia.
In addition, a study conducted by Kadence International, a US-based research firm, surveyed more than 3,400 TikTok users and 25 non-profit organizations between August and September 2022. This comprehensive study used a combination of online surveys and offline interviews to gather insights.
The results revealed some interesting findings. Of the organizations surveyed, a staggering 79 percent said TikTok played an important role in helping them transition from offline to online marketing channels. In addition, an impressive 74 percent credited the app with increasing their sales volume.
While Chew Shou Zi did not disclose the exact amount or timing of the investment, he did reveal that part of the investment will include a US$12.2 million (S$16.4 million) fund that will be used to support more than 120,000 SMEs, entrepreneurs and young people over the next three years.
TikTok also plans to invest in training, promotion and support for small sellers who want to join the TikTok Shop e-commerce platform. With these steps, TikTok is committed to being a strong partner to small businesses, enabling them to tap into the huge potential of the platform.
At the same time, TikTok also revealed interesting findings in its latest report. The report found that more than six out of 10 creators earning revenue from the app across nine countries in Southeast Asia earn more than the minimum wage in their country.
Nearly nine out of 10 creators in Laos managed to earn more than their country's minimum wage. Meanwhile, the Philippines was the lowest, with only four in 10 creators earning more than the minimum wage. In Indonesia, more than six in 10 creators earn above the minimum wage.
While Southeast Asia has become one of TikTok's largest markets in terms of users, the platform still faces challenges in converting this user base into a significant source of e-commerce revenue. Amidst fierce competition from giants like Tokopedia, Lazada and Alibaba-owned Shopee, TikTok has yet to achieve dominance as a major player in the industry.
An interesting report by Singaporean venture firm Momentum Works revealed that Shopee will be the dominant player in Southeast Asia's e-commerce industry by 2022. With nearly half of the total e-commerce merchandise value of US$47.9 billion, Shopee leads the market. It is followed by Lazada with a value of US$20.1 billion and Tokopedia with a value of US$18.4 billion.
Meanwhile, TikTok Shop only facilitated US$4.4 billion worth of transactions. This figure is indeed an increase of $600 compared to 2021. However, it still lags far behind Shopee.
TikTok's investment move comes amid increased scrutiny and regulation over concerns that Beijing could use the app to collect user data or further its own interests.
Although TikTok has consistently denied sharing data with the Chinese government and said it would not do so if asked, several countries, including the UK and New Zealand, have banned the app on government-owned devices. Driven by broader geopolitical factors.
While the app has not faced widespread bans in Southeast Asia, it has come under scrutiny for its content. Indonesia and Vietnam are two countries that have announced such policies. In 2018, Indonesia briefly banned TikTok for posts deemed to contain "pornography, inappropriate content and blasphemy." Meanwhile, Vietnam said the content on the platform threatened the country's youth and traditions, so the government announced an investigation into TikTok in the country.
