TikTok invests billions in Southeast Asia
TikTok developer ByteDance is having a hard time in the Western market. Whether it is true or not, the app’s potential risks are constantly in the news. Many fear espionage by Chinese government actors or commercial misuse of the huge amounts of data the app collects from users. Governments everywhere are banning the use of the app on work phones. Recently, the US state of Montana even tried to completely ban the use of the app within its borders.
And then there’s ByteDance’s recent announcement that it’s going to invest massively in the Asian market. Is TikTok getting too hot underfoot?
Maximum commitment to growth market
Southeast Asia has always been one of the largest markets for TikTok in terms of absolute numbers. Roughly 360 million people live in the region. The relatively young population generates around 325 million visitors every month. The share of the region in the viewing figures does not yet translate into large income. This is mainly due to the great competition for TikTok in that market, for example from e-commerce company Lazada, part of the Alibaba group.
In the coming years, the billions will mainly be used to improve the position of the TikTok Shop. A detailed plan has not been presented to the public, but according to the company, the focus is on training, advertising and supporting small merchants who want to become part of the TikTok Shop. In Indonesia alone, ByteDance already has 2 million of those small traders.
TikTok does not want to remain dependent solely on advertising revenue for revenue. For example, the plan is on the table to offer viewers the opportunity to buy products that can be seen on live streams directly via links in the app.
Chew said content on its platform was becoming more diversified as it adds more users and expands beyond advertising into e-commerce, allowing consumers to purchase goods through links on the app during livestreaming. E-commerce transactions across the region totaled nearly $100 billion last year. More than half of that originated in Indonesia, according to data from Momentum Works. In total, TikTok facilitated a share worth $ 4.4 billion. Much more than last year’s 600 million, but significantly less than, for example, Shopee, good for 45 billion.
ByteDance on thin ice
Allegations against Byte Dance abound. Based on the fears expressed above, action is being taken against the Chinese company. That while there is as yet no evidence on the table that makes it clear that the Chinese government uses TikTok for espionage or other state-related activities. The closest to tangible evidence comes the allegations of a former employee. Incidentally, this involves tracing activists, etc. who fight for the freedoms of the former British crown colony of Hong Kong.
Yet much of the fear cannot be dismissed as paranoia, or internal politics. China may present itself as a Communist country, but in international circles the country has been seen as state capitalist by Deng Xiaoping since the opening of the markets. Long story short, running a business without a big finger from the state in your porridge is impossible. It is no secret that China has different plans for the future than most Western countries. As a result, a potential threat such as TikTok is taken very seriously for security reasons.
TikTok naturally denies in all colors that it has ever shared data with the Chinese government. The announced plans also say nothing about fears regarding investments in the west. Still, the company must have realized that investing in the Western market has less and less chance of paying dividends. Whether they’ll admit it or not, this move can hardly be seen in the light of mounting pressure from Western governments on the company.
