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TikTok is nearing a deal to invest in an Indonesian technology company in a push to resuscitate its ecommerce business in its biggest market after the Chinese-owned group was forced out this year.
The Beijing-based video app, which was made to suspend TikTok Shop in September after Indonesian government rules kicked in, is in advanced negotiations to invest in the ecommerce unit of Jakarta-listed GoTo, known as Tokopedia. The deal could be completed as early as this month, two people familiar with the negotiations said.
GoTo is a national technology champion in Indonesia with ride-hailing, food delivery and financial services operations in addition to its ecommerce business.
The move by TikTok, the first such arrangement by the company, could become a new model for overcoming regulatory setbacks and government opposition in countries spanning south-east Asia, Europe and the US. Malaysia and Vietnam have also threatened to impose rules to curb the app.
GoTo declined to comment, while TikTok did not immediately reply to a request for comment. The deal talks were first reported by Bloomberg.
TikTok had considered other options that included building a standalone shopping app but there were internal reservations that this might set a precedent in other markets. The export of the Chinese group’s shopping model overseas has been beset by problems and it has already been forced to restructure the business.
Indonesia was TikTok Shop’s first and largest market. The south-east Asian economy has the world’s fourth-largest population and the Chinese group has enjoyed rapid growth since launching its online commerce business there in 2021. Brands and influencers can broadcast live and sell products through livestreams or on shop pages on the viral video platform.
TikTok chief executive Shou Zi Chew in June appeared at a public event in Jakarta pledging to spend billions of dollars in the country over the next few years.
But in a sudden move on September 27 the Indonesian government banned transactions on social media platforms to ensure “fair and just” competition as well as to protect user data. The decision was widely seen as unofficially targeting TikTok.
The company warned at the time the rules would hit the livelihoods of the 6mn sellers and nearly 7mn influencers who use TikTok Shop in Indonesia. Before the ban was placed, the Chinese company had hoped to generate about $6bn in gross merchandise value in Indonesia, nearly triple the figure from 2022, multiple people said.
The Financial Times reported in October that TikTok was considering partnerships and had held discussions with GoTo and other retail businesses as the group searched for options to stay in one of the world’s most lucrative consumer markets. A joint venture was also considered but a stake is more likely, one of the people said.
“The deal could be a win-win. TikTok gets to stay in Indonesia and GoTo gets a leg-up against its rivals,” said one person directly involved in the negotiations.
GoTo’s ecommerce unit has been locked in expensive competition with rival platforms for years including Shopee, owned by Nasdaq-listed Singaporean company Sea. Alibaba-owned Lazada, another ecommerce business in south-east Asia, is also competing heavily with Tokopedia in Indonesia.
Additional reporting from Cristina Criddle in London
