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A merchant sells crystal ornaments via a live TikTok broadcast.

CFOTO | Future Publishing | Getty Images

TikTok Shop is a rising threat to major e-commerce players such as Shopee and Lazada in Southeast Asia.

It comes as its parent ByteDance pushes the short video app in markets outside the U.S. and India to create alternative revenue streams.

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TikTok Shop is the e-commerce marketplace of short video app TikTok, which is owned by Chinese tech giant ByteDance. The shopping app enables merchants, brands and creators to showcase and sell their goods to users.

In 2022, TikTok Shop expanded to six Southeast Asian countries — Singapore, Malaysia, Indonesia, the Philippines, Vietnam and Thailand.

“TikTok continues to grow rapidly in Southeast Asian countries. We estimate that TikTok’s 2023 [gross merchandise value] will reach 20%~ of Shopee, which we suggest prompted Shopee to defensively increase sales and marketing since April,” said Shawn Yang, analyst at Blue Lotus Research Institute, in a recent report on Sea Group, the owner of Shopee.

TikTok did not want to comment or reveal numbers.

TikTok Shop’s GMV, or total value of goods sold, skyrocketed more than four times to $4.4 billion in Southeast Asia in 2022, according to internal data obtained by tech media outlet The Information. TikTok Shop is reportedly aiming for a GMV target of $12 billion by 2023.

Impulse buying from watching content is an advantage TikTok has.

Sachin Mittal

Head of telecom & internet sector research, DBS Bank

To be clear, TikTok Shop’s current GMV is only a fraction of Shopee and Lazada’s.

Shopee netted $73.5 billion in GMV in 2022 while Lazada’s GMV was $21 billion for the year through September 2021, according to available public figures.

Rising threat

A TikTok spokesperson told CNBC that TikTok Shop “continues to grow rapidly” as both large and small users use the platform to reach new customers. TikTok is “focused on the continued development of TikTok Shop in Southeast Asia,” said the spokesperson.

As of May, the number of TikTok users in Southeast Asia alone is 135 million, according to market research company Insider Intelligence.

Indonesia has the second largest population of TikTok users after the U.S., according to Statista.

Indonesia is Southeast Asia’s most populous country, where 52% are young people and it has around 113 million TikTok users.

“Impulse buying from watching content is an advantage TikTok has,” Sachin Mittal, head of telecom & internet sector research at DBS Bank, told CNBC.

Sea Group is banking on its e-commerce arm Shopee to lift the group’s balance sheet as its gaming arm Garena continues to see revenue decline, given the lack of a strong games pipeline and the continued ban of its flagship game Free Fire in India due to national security threats.

Shopee is expanding its footprint in Malaysia and continues to build up its Brazil operations after exiting several European and Latin American markets.

TikTok is spending an incredible amount of money right now on incentives to onboard buyers and sellers, which may not be sustainable.

Jonathan Woo

Senior analyst, Phillip Securities Research

A survey conducted by online retail insights company Cube Asia revealed that consumers spending on TikTok Shop are reducing their spending on Shopee (-51%), Lazada (-45%), Offline (-38%) in Indonesia, Thailand, and Philippines.

Shopee and Lazada declined to comment on competition from TikTok Shop.

Data from web analytics firm Similarweb revealed that Shopee is currently the largest online marketplace in Southeast Asia, holding 30% to 50% traffic share across the region in the last three months, while Lazada holds the second spot with 10% to 30% traffic share.

Scrutiny on TikTok

TikTok Shop’s push comes as the app is being scrutinized in its largest market, the U.S., amid rising geopolitical tensions and tech rivalry between China and the U.S.

Last week, the U.S. state of Montana banned TikTok, which could spark other states to suit. TikTok disputed Montana’s allegations that the Chinese government “could access data about TikTok users, and that TikTok exposes minors to harmful online content” in a lawsuit filed Monday to try and reverse the ban.

Banning TikTok at a state level 'doesn't make sense', says Craft Ventures' David Sacks

TikTok CEO Shou Zi Chew’s testimony before Congress in March did not ease lawmakers’ worries about the app’s connections to China or the adequacy of Project Texas, its contingency plan to store U.S. data on American soil.

TikTok has also been banned in India since 2020, alongside other apps said to have Chinese origin. It is not accessible in China, though its Chinese version Douyin is widely used by over 750 million daily active users.

Not sustainable

Meanwhile, Shopee charges more than 5% on commission, transaction and service fees.

A CNBC check revealed that four-ply toilet paper from Nomieo was selling on TikTok at 5.80 Singapore dollars for twenty-seven rolls. In comparison, the same goods are selling at around SG$16.80 on Shopee.

Woo noted that TikTok Shop is “still very young” and in the “burn-cash-to-grow phase which may not bode well in today’s market given higher cost of funding.”

TikTok Shop is also “just a platform with no end-to-end capabilities” unlike Shopee and Lazada which have been investing heavily in improving logistics for faster deliveries and returns, increasing overall user experience and trust for sellers and buyers, he said.

Overall, I think TikTok Shop has the potential to be as big as Shopee or Lazada, though this might take quite a number of years.

Jonathan Woo

Senior analyst, Phillip Securities Research

It also has a smaller user base at this point in time with a younger demographic which means less spending ability, said Woo.

“I don’t think there’s a big risk to Shopee from TikTok,” said Mittal. “Shopee can afford to lose some market share, but Lazada cannot.”

Lazada has been trying to catch up with Shopee ever since Shopee overtook the company to become Southeast Asia’s biggest e-commerce platform in 2020.

“Overall, I think TikTok Shop has the potential to be as big as Shopee or Lazada, though this might take quite a number of years,” said Woo, noting the gap between TikTok Shop and Shopee’s GMVs.

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Xiaomi releases electric car $4K cheaper than Tesla’s Model 3 as price wars heat up

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Xiaomi releases electric car K cheaper than Tesla's Model 3 as price wars heat up

Chinese consumer electronics company Xiaomi revealed Thurs., Dec. 28, 2023, its long-awaited electric car, but declined to share its price or specific release date.

CNBC | Evelyn Cheng

BEIJING — Chinese smartphone company Xiaomi said Thursday it will sell its first car for far less than Tesla’s Model 3, as price wars heat up in China’s fiercely competitive electric car market.

Xiaomi CEO Lei Jun said the standard version of the SU7 will sell for 215,900 yuan ($30,408) in the country — a price he acknowledged would mean the company was selling each car at a loss.

Tesla’s Model 3 starts at 245,900 yuan in China.

Lei claimed the standard version of the SU7 beat the Model 3 on more than 90% of its specifications, except on two aspects that he said it might take Xiaomi at least three to five years to catch up with Tesla on. He also said the SU7 had a minimum driving range of 700 kilometers (nearly 435 miles) versus the Model 3’s 606 kilometers. The company said orders had exceeded 50,000 cars in the 27 minutes since sales started at 10 p.m. Beijing time Thursday.

Deliveries are set to start by the end of April, Lei said. Lei also claimed that Xiaomi’s car factory, for which all “key” steps are fully automated, can produce an SU7 every 76 seconds. It was not immediately clear whether the factory was fully operational.

Earlier this week, the Xiaomi CEO said on social media the SU7 would be the best sedan “under 500,000 yuan” ($69,328).

The car is entering a fiercely competitive market in China, where companies are launching a slew of new models and cutting prices in order to survive. Chinese telecommunications giant Huawei has partnered with traditional automakers, most notably launching the Aito brand whose vehicles are often on display in Huawei smartphone showrooms.

Tesla‘s Model 3 is the best-selling new energy sedan in China that has a driving range of at least 600 kilometers (372 miles) and costs less than 500,000 yuan, according to data from industry website Autohome.

Xiaomi targets 20 million premium users for its new electric vehicle, says president

BYD‘s Han sedan starts at 169,800 yuan, according to Autohome.

Nio‘s ET5 starts at 298,000 yuan, while Xpeng‘s P7 starts at 209,900 yuan, the data showed. Geely-owned Zeekr’s 007 sedan starts at 209,900 yuan, according to Autohome.

Sales of new energy vehicles, which include battery-only powered cars, have surged in China to account for about one-third of new passenger cars sold, according to the China Passenger Car Association.

Accessories

The heads of competing electric car startups Nio, Xpeng and Li Auto were among the featured guests at the Xiaomi SU7 launch event.

Lei on Thursday showed off a range of accessories such as an in-car refrigerator, a custom front-window shade, and a smartphone holder, some available for free with a car purchase before the end of April, and others for a separate price.

The SU7 supports Apple’s Car Play and can integrate with the iPad, Lei said. He also revealed driver-assist tech for highways and cities, set to be fully available in China in August.

Tesla’s Autopilot for driver assist on highways is available in China, but the company’s “Full Self Driving” for city streets has yet to be released in the country.

Despite saying Xiaomi wanted to compete with Porsche at a car tech event in December, Lei acknowledged that the SU7 had longer to go before it might be able to compete at this more premium level. He announced that the “Max” version of the SU7, aimed as a competitor with Porsche’s Taycan, would sell for 299,900 yuan.

Ecosystem of devices

The rapid rise of Chinese electric vehicle maker BYD

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FTX founder Sam Bankman-Fried sentenced to 25 years for crypto fraud, pay $11 billion in forfeiture

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FTX founder Sam Bankman-Fried sentenced to 25 years for crypto fraud, pay  billion in forfeiture

FTX founder Sam Bankman-Fried sentenced to 25 years in prison for massive crypto fraud

FTX founder Sam Bankman-Fried was sentenced to 25 years in prison on Thursday for the massive fraud and conspiracy that doomed his cryptocurrency exchange and a related hedge fund, Alameda Research.

The sentence in Manhattan federal court was significantly less than the 40 to 50 years in prison that federal prosecutors wanted for Bankman-Fried. But it was much more than the five to six-and-a-half years suggested by his attorneys.

“There is a risk that this man will be in position to do something very bad in the future,” Judge Lewis Kaplan said before sentencing the 32-year-old and ordering him to pay $11 billion in forfeiture to the U.S. government.

“And it’s not a trivial risk at all,” Kaplan added.

The judge said that in 30 years on the federal bench, he had “never seen a performance” like Bankman-Fried’s trial testimony.

If Bankman-Fried was not “outright lying” during cross-examination by prosecutors, he was “evasive,” Kaplan said.

Jurors at trial likewise did not buy Bankman-Fried’s version of events, convicting him in November of seven criminal counts and holding him responsible for losing about $10 billion in customer money due to the securities fraud conspiracy.

Kaplan on Thursday said the quarter-century prison term has “the purpose of disabling him to the extent that can appropriately be done for a significant period of time.”

Before being sentenced, Bankman-Fried spoke contritely even as he suggested that the billions of dollars customers lost was the result of a “liquidity crisis” or “mismanagement,” not fraud.

Indicted FTX founder Sam Bankman-Fried leaves the U.S. Courthouse in New York City, July 26, 2023.

Amr Alfiky | Reuters

“My useful life is probably over,” he said while wearing a beige jailhouse jumpsuit. “It’s been over for a while now since before my arrest.”

“They built something really beautiful and I threw all of that away,” he said of his co-workers at FTX, a company once valued at $32 billion. “It haunts me every day.”

“A lot of people feel really let down. And they were very let down,” he said. “And
I’m sorry about that. I’m sorry about what happened at every stage.”

“It’s been excruciating to watch this all unfold,” he told Kaplan. “Customers don’t deserve this level of pain.”

“I was the CEO of FTX and I was responsible.”

But even as he took some responsibility, Bankman-Fried suggested that customers eventually would get back the money they placed with his exchange, and blamed a federal bankruptcy court for not making those customers whole yet.

Kaplan appeared to stop paying close attention at that point.

In response, Bankman-Fried crossed his arms and began rapidly tapping his right foot as he continued speaking.

Assistant U.S. Attorney Nicholas Roos, arguing for a prison sentence of up to five decades, scoffed at the picture painted by Bankman-Fried and his lawyers.

FTX’s collapse was not due to “a liquidity crisis or act of mismanagement,” Roos said. “It was the theft” of billions of dollars of customer money around the world, the prosecutor said.

“It was a loss that affected people significantly.”

Manhattan U.S. Attorney Damian Williams, in a statement after the sentencing, said, “Samuel Bankman-Fried orchestrated one of the largest financial frauds in history.”

“His deliberate and ongoing lies demonstrated a brazen disregard for his customers’ expectations and disrespect for the rule of law, all so that he could secretly use his customers’ money to expand his own power and influence,” Williams said.

Attorney General Merrick Garland said, “Anyone who believes they can hide their financial crimes behind wealth and power, or behind a shiny new thing they claim no one else is smart enough to understand, should think twice. I

Bankman-Fried’s family, in a statement, said, “We are heartbroken and will continue to fight for our son.” Both Joseph Bankman and Barbara Fried, who are Stanford Law professors, were in court for the sentencing.

Barbara Fried and Allan Joseph Bankman, parents of FTX Co-Founder Sam Bankman-Fried, arrive at court in New York, US, on Thursday, March 28, 2024. Sam Bankman-Fried returns to court for sentencing after being convicted of a massive fraud that led to the collapse of his FTX exchange. 

Yuki Iwamura | Bloomberg | Getty Images

Before he sentenced SBF, Kaplan said he rejected “the entirety of defendant’s argument there was no loss” at FTX, calling that claim “misleading, logically flawed and speculative.”

Several victims of Bankman-Fried then talked about the damage to their lives from his crimes.

Bankman-Fried looked at the victims as they talked to the judge.

Bankman-Fried plans to appeal his conviction and sentence.

Three other people, who all testified against Bankman-Fried at trial, are awaiting their own sentencings after pleading guilty to criminal charges related to FTX and Alameda Research.

They are Caroline Ellison, the Alameda CEO who at one time dated Bankman-Fried, FTX engineering chief Nishad Singh and Gary Wang, the co-founder and chief technology officer of FTX.

WATCH: The collapse of FTX: Insiders Tell All

This is developing news. Check back for updates.

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Xi tells Dutch prime minister: No force can stop China’s tech advance

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Xi tells Dutch prime minister: No force can stop China’s tech advance

THE HAGUE, NETHERLANDS – MARCH 23:Dutch Prime Minister Mark Rutte meets with the President of the People’s Republic of China Xi Jinping at the Catshuis March 23, 2014 in The Hague, Netherlands. (Photo by Valerie Kuypers-Pool/Getty Images

Valerie Kuypers-Pool | Getty Images News | Getty Images

China’s technological progress cannot be stopped, Chinese President Xi Jinping told Dutch Prime Minister Mark Rutte when they met in Beijing Wednesday for talks on areas such as the critical semiconductor industry.

“The Chinese people also have legitimate development rights, and no force can stop the pace of China’s scientific and technological progress,” said Xi, according to Xinhua News Agency.

Xi said China will “continue to pursue a win-win approach.”

Relations between China and the Netherlands have been strained since the the Netherlands, together with the U.S., blocked exports of advanced chip technology to China over concerns they could be used for military purposes.

Semiconductor chips are critical components which can be found in everything from smartphones to automobiles.

Dutch tech giant ASML has been barred from exporting extreme ultraviolet lithography machines to China — it is the only company currently capable of making such machines To date, it has not shipped a single EUV machine to China yet.

Such EUV lithography machines are crucial for chip manufacturing and are used by companies like Taiwan’s TSMC to make the smallest and most sophisticated chips.

In January, the Netherlands barred ASML from exporting some of its deep ultraviolet lithography systems to China, which are used to make slightly less advanced chips.

Semiconductor chips: There's a 'three horse' race outside mainland China, analyst says

Beijing slammed the Dutch government’s move, urging the Netherlands to “uphold an objective and fair position and market principles” and “protect the shared interests” of the two countries and their companies.

“Creating scientific and technological barriers and severing industrial and supply chains will only lead to division and confrontation,” Xi said Wednesday, according to Xinhua state media.

He said cooperation is the only way and added that “decoupling and breaking the chain” is not an option.

Xi said China is ready to continue dialogue with the Netherlands and urged the Dutch side to “provide a fair and transparent business environment for Chinese enterprises.”

According to Reuters, Rutte said Wednesday the Netherlands tried to ensure that export restrictions, when related to semiconductor industry and companies like ASML, are never aimed at one country. “We always try to make sure the impact is limited,” he was quoted as saying.

Chinese state media reported that Rutte responded by saying decoupling is not a policy choice for the Dutch government either, “since any act undermining China’s development interests will only boomerang.”

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