Can the Indonesian government continue to pressure TikTok and maintain its cross-border market?

Although last year the TikTok ban in Indonesia caused a huge stir and caught many TikTok Indonesian merchants off guard.

Fortunately, on December 12th, the TikTok Shop business in Indonesia resumed.

Later, news came out that in order to re-enter the Indonesian market, TikTok invested a huge sum of $840 million to merge with Tokopedia, continuing to expand the Indonesian e-commerce market under the name PT Tokopedia, which made countless merchants breathe a sigh of relief.

However, just when the outside world thought the storm was over, recently, Indonesia's Minister of Cooperatives and Small and Medium Enterprises, Teten Masduki, stated publicly thatTikTok Shop is still in violation in Indonesia.

The controversy still revolves around the issue of how social media and e-commerce can "coexist".

Currently, Masduki has not disclosed the next steps or the approximate timeline, only stating that discussions are ongoing with relevant departments.

With this news, it's unclear whether TikTok regrets its decision to merge with Tokopedia at great expense, but I think, most likely, it does not.

Indonesia has a huge population, is the largest economy in Southeast Asia, and has the most internet users. According to data from Statista, the number of TikTok users in Indonesia reached 92 million in 2023, accounting for 33.8% of the total population.It is expected that by 2025, the number of TikTok users in Indonesia will reach 120 million.

Such a huge user base and rapid growth rate represent enormous market potential. Moreover, with the development of e-commerce and social media, social media ads and video ads have become the fastest-growing types of advertising.

So no matter the cost, as long as the final result is more beneficial than harmful, TikTok will not let go of this big cake.

Speaking of the Indonesian market, according to official TikTok data, the average age of TikTok users in Indonesia is 24, with 60% of users under 30 years old.

This proves that Indonesian TikTok users have high purchasing power and activity, and are highly receptive to new things and trendy culture, making them the ideal customer group for cross-border merchants. So for cross-border merchants,Indonesia can be said to be the most ideal overseas market in Southeast Asia.

In Indonesia, consumers can be divided into three categories: the potential online natives "Gen Z"; the mature e-commerce shoppers with diverse needs "Millennials"; and the stability- and health-seeking conservatives "Gen X+".

Although these three groups have different concepts of e-commerce consumption, research shows that all three are equallyprice sensitive, and have high recognition and loyalty to local products and brands. Therefore, for overseas brands,localization of overseas brands is key.

In Indonesia's overall industry, there are currently several industries that are popular trends for cross-border expansion, and with the help of social media marketing, it is easier to achieve good marketing results.

Games

Data shows that 83% of Indonesians are loyal gamers, and their love for games crosses age, gender, and region. Moreover, 23% of Indonesians have paid for mobile games in the past month.

According to NiKo estimates, by 2027, the Indonesian gaming market will exceed $1.5 billion, and its growth rate will surpass neighboring Malaysia and Singapore, as well as mature markets like Japan and South Korea.

Therefore, gaming is currently a hot trend in the Indonesian market, but one thing to note is language localization.

E-commerce

The demand for e-commerce goes without saying; TikTok's vigorous expansion into the Indonesian market is precisely because of its e-commerce market development.

Statistics show that fashion, beauty, and food were the top categories for online sales in 2023, reflecting the mainstream trends in the Indonesian market. However, with the development of social e-commerce, other fields also show signs of increasing share.

Beauty

Indonesia is one of Asia's largest cosmetics and skincare markets, and in Indonesia, personal care products are the core of the beauty industry.

According to TikTok surveys, mainstream beauty concepts in Indonesia are slowly changing,with increasing attention to diversity and natural skin, and at the same time,a preference for cosmetics that fit the Islamic cultural lifestyle.

This is something that beauty brands expanding to Indonesia need to pay special attention to.

3C Electronics

3C electronics has always been a popular industry for cross-border expansion, and Indonesians are willing to spend on emerging technology and electronic products, so its industry attractiveness will not change much in the future.

In addition, holiday periods are also key marketing points for TikTok in Indonesia. Especially the recent Ramadan, which is the most important festival in Indonesia. During Ramadan, sales on all platforms increase significantly, making it an unmissable marketing opportunity for companies expanding into the Indonesian market.

It is expected that in the coming years, TikTok's Indonesian market will continue to grow rapidly, providing broader development space for cross-border merchants. Merchants need to actively embrace opportunities, continuously innovate marketing models, and better meet the needs of Indonesian users to achieve greater business success.