TikTok eyes a shopping sales goal between $12 billion and $13 billion for the second half this year in the US, according to a 36Kr report on Tuesday. The high target was set after the short video platform fell far below expectations in the first five months.

The report quoted key data from Tabcut, a Chinese firm that tracks TikTok Shop’s performance, indicating that TikTok generated less than $2 billion in the US shopping business from January to May 2024.

Why it matters: The potential ban TikTok faces in America seems to have already hurt its growing e-commerce business in its largest user base country.

Details: TikTok, the international version of Douyin, was reportedly hoping to expand its US e-commerce business tenfold to as much as $17.5 billion this year, according to a January report from Bloomberg. TikTok has so far only accomplished 11.4% of its GMV goal in the past 5 months, the 36Kr report said.

• TikTok hosted a small closed-door meeting in Shenzhen in mid-May, 36Kr added, where it invited its key domestic sellers to convey a message that the platform “remains optimistic about its prospects in the US market despite facing a political headwind.” The company also assured attendees that TikTok has comprehensive contingency plans in place even in the “worst-case scenario.”
• As the latest effort to counter the US government’s request to divest or ban the app, TikTok parent ByteDance has appointed John Rogovin, a former lawyer of Warner Bros, as its global general counsel. The company sued the US government in May with the aim of blocking a law requiring it to sell its US operation or face a total ban. In the appointment announcement, TikTok said Rogovin will report to ByteDance CEO Liang Rubo, and indirectly to TikTok chief Shou Chew.

Context: TikTok Shop officially entered the US market in September 2023, although little official data has been given to the outside world regarding its merchants and sales. The platform has grown to 170 million users in the American market, according to figures released in January,  up from 150 million last year.

TikTok CEO Shou Zi Chew told the platform’s users that “we aren’t going anywhere” after US President Joe Biden signed the sell-or-ban bill targeting the app into law, giving TikTok’s Chinese parent company nine to 12 months to divest.

“The facts and the Constitution are on our side and we expect to prevail again,” Chew said in a video on Wednesday.

Why it matters: The passing of the bill after months of threats is a clear wake-up call for other Chinese apps that see the US as a top destination for their business expansion or have already entered the market there.

Details: The countdown to the forced sale of TikTok began when Biden signed the bill on April 24, but the short video app’s 170 million American users will continue to have access to it during this period. TikTok is expected to robustly challenge the move in the US courts.

• The law comes as US Secretary of State Antony Blinken begins his visit to China, where he expects to meet the country’s foreign minister Wang Yi.
• Former editor-in-chief of Chinese media outlet Global Times, Hu Xijin, who is known for his nationalist stance, wrote on X that TikTok should “fight to the end”, hours after the Senate ruled on the platform on Wednesday. He said he believes it will be “meaningless” if ByteDance founder Zhang Yiming “loses this career and only gets some money.”
• On Wednesday, China’s Ministry of Foreign Affairs commented it had nothing more to add to the country’s stance on the TikTok ban as the government institution said it has already made clear its position that there would be “no fairness to speak of” if the US uses national security reasons to ban foreign companies.

Context: TikTok, along with its Chinese owner ByteDance, spent over $7 million on in-house lobbyists and digital ad campaigns this year in an effort to avert the bill passing, according to lobbying disclosure reports cited by CNBC.

TikTok’s efforts to continue operating in the US under Chinese parent company ByteDance appear doomed after a majority of House lawmakers passed a bill that aims to force the Beijing headquartered tech firm to divest from the wildly popular short video platform or see it removed from app stores in the country. The bill still needs to pass the Senate, but President Joe Biden has indicated he will sign it into law if it reaches his desk. 

The Republican-controlled House of Representatives voted 352-65 on the bill. Of the 65 legislators who voted against it, 50 were Democrats, casting some uncertainty on whether the bill will pass in the Democrat-majority Senate. The potential legislation is also likely to face legal challenges from TikTok.

Why it matters: If ByteDance agrees to sell TikTok, one of China’s most successful apps worldwide, it would bring the Beijing-based company billions of dollars in immediate income, but the longer-term impact on the firm’s value is uncertain. The tug-of-war over the app also reflects the high-profile tensions between the US and China.

Details: TikTok labeled the House’s voting process “secret” in a statement released after the result. The platform insisted on characterizing the bill as a “ban”, while emphasizing that it hosts 170 million users and 7 million small businesses in the US market in a post on X, formerly Twitter.

• Chinese nationalist Hu Xijin, who previously served as editor-in-chief of the state-run Global Times newspaper, said in a recent social media post that the US’s concern over TikTok’s threat to national security is “grossly exaggerated,” and that this is a fact “everyone in the world knows.” The commentator implored the short video app not to “get weak in the knees,” adding that it will share a bright future if it wins this “war.”
• The video-sharing platform sent local users in the US a pop-up notification last week encouraging them to call their political representatives and urge them to fight against the bill. The average TikTok user in the US is an adult “well past college age,” chief executive Shou Zi Chew revealed in his testimony on Capitol Hill last March.
• While Biden has shown broad support for the bill – despite his election campaign recently joining the platform – his rival in the upcoming US presidential election, Donald Trump, has made a U-turn on the legislation, voicing concerns that banning TikTok would only empower Facebook owner Meta. “There are a lot of young kids on TikTok who will go crazy without it,” Trump said in a recent CNBC interview, despite his administration also previously attempting to force ByteDance to sell the app.

Context: According to OpenSecrets, a nonprofit organization that tracks lobbying data, ByteDance spent a record $8.74 million on federal lobbying last year, nearly double its spending in 2022.

The European Commission has opened a formal investigation into TikTok to assess potential violations of the Digital Services Act (DSA). Companies found in breach of the act could face fines of up to 6% of their global revenue.

Launched on Monday, the investigation into the Chinese-owned platform will involve looking at various aspects of TikTok’s operations including safeguarding of minors, ensuring advertising transparency, facilitating access to data for researchers, and managing the risks associated with addictive and harmful content.

Why it matters: The move extends the EU’s investigation of the ByteDance-led video-sharing app from previous concerns regarding its handling of disinformation related to content around Hamas and its management of children’s accounts, and intensifies the company’s immediate need to address the escalating scrutiny of major tech firms by the EU.

Details: TikTok was defined as a Very Large Online Platform (VLOP) by the European Commission under the DSA in April 2023, following its announcement of 135.9 million monthly active users in the EU.

• The European Commission believes that TikTok’s algorithms in the EU are designed to induce a “rabbit hole effect” on users, referring to the tendency of users to become immersed in online content and potentially distance themselves from real-life experiences.
• In response, TikTok said it will continue to work with experts and the industry to ensure young people are safe on its platform and that it looks forward to explaining this work in detail to the European Commission.
• The investigation comes just days after the short video app lost a court battle to suspend its designation as a gatekeeper, which requires companies with significant economic power and market influence to comply with a series of regulations under EU rules in the areas of advertising, user data, and intermediary services.

Context: In 2023, the Douyin sister app was fined €345 million in Ireland and £12.7 million in the UK by local regulators, who cited violations of the law in the platform’s handling of children’s account data.

TikTok turned against its former cooperation partner Universal Music Group (UMG) overnight after the world’s largest music copyright owner threatened to remove all of the music it owns from the video-sharing platform, which lambasted UMG’s “self-serving actions” and characterized them as putting their interests above those of artists, songwriters, and fans. 

Why it matters: The dispute would reportedly also affect TikTok sibling Douyin, potentially causing both platforms to have to remove Universal songs from the huge number of videos using them as background music. The falling out with UMG may also lead to a similar response from other music companies. 

Details: The collapse of the deal would likely remove the pop songs that myriad TikTok videos use as background music, affecting tracks by Universal artists including Taylor Swift and Billie Eilish, as well as Chinese language singers Stefanie Sun and Eason Chan.

• In an open letter, Universal said the success of TikTok has been largely rooted in the music created by “our artists and songwriters,” but revenue from the Chinese-owned company only accounts for about 1% of Universal’s income, which the letter claimed was a poor rate of compensation.
• According to media outlet Caixin, the three-year authorization contract between both sides signed in February 2021 was also applied to TikTok sister app Douyin in China, meaning Douyin users are no longer allowed to create videos using copyright-protected music from UMG starting from Thursday, unless the two parties reach a new deal addressing Universal’s concerns over higher pay for artists, AI creation, and user protection.
• In response, TikTok claimed Universal’s statement formed a “false narrative and rhetoric,” and blamed the music firm for leaving a platform that had served as a “free promotional and discovery vehicle for their talent.”

Context: This is not the first dispute involving a major tech platform and Universal-signed artists. In 2014, Taylor Swift decided to remove her entire discography from Spotify due to issues around royalty payments, with her boycott of the streaming service lasting three years.

TikTok is seeking to significantly expand its e-commerce business in the US, with plans to achieve a tenfold increase in merchandise sales in the world’s largest economy this year, a target of $17.5 billion, Bloomberg reported on Thursday, citing unnamed sources.

Why it matters: TikTok’s ambitious goal will see it push harder to redirect users’ attention from short videos to in-app shopping in a potential threat to established US e-commerce giant Amazon. The move also signals that the ByteDance-owned short video app, which has 150 million users in the US, will compete more directly with its Chinese counterparts Temu and Shein in 2024.

Details: The global value of goods sold on TikTok was expected to reach around $20 billion last year, according to Bloomberg, with its Southeast Asian platforms contributing the bulk of these sales. Singapore-based research company Momentum Works projected in mid-2023 that TikTok Shop was poised to capture a 13.2% share of the Southeast Asian e-commerce market by the year’s end.

• The highest selling products on TikTok Shop are mainly those that more easily lend themselves to promotion by video, such as clothing and beauty items, while its competitors offer a broader range, from kitchen utensils to digital products.
• Shortly after TikTok Shop went live in the US in September, the hit social media platform experienced early success at its first Black Friday and Cyber Monday events, with the major shopping days seeing more than 5 million new customers from the US make purchases on TikTok.
• Meanwhile, TikTok announced this week that transaction fees for merchants in most product categories will increase to 6% of each sale starting in April, and by July, these will rise again to 8%. TikTok Shop currently charges a commission of 2% plus 30 cents per transaction. The change is likely to have an impact on profit margins for store operators.

Context: Since its initial trial in 2021, TikTok’s foray into e-commerce has sought to replicate the proven path taken by its Chinese counterpart Douyin in the online retail field, guiding loyal users previously attracted by viral short videos to engage in shopping on the platform. 

• Indonesia, the first country in which TikTok Shop launched, banned online shopping on social platforms in September, pointing to the protection of small businesses and user data, and forcing TikTok Shop to suspend operations. Despite this setback, TikTok quickly made a comeback in Southeast Asia’s most populous nation through a deal with local company GoTo backed by a $1.5 billion investment.

A federal judge has blocked a law in the US state of Montana that sought to bar the use of TikTok, saying it “oversteps state power”, a month before the ban was due to take effect.

Why it matters: The move suggests efforts to prohibit use of the Chinese-owned video sharing app in the US will face significant legal challenges. Montana was the first state set to implement a blanket TikTok ban.

Details: In a statement, the US District Judge Donald Molloy said the ban targets “China’s ostensible role in TikTok” rather than protects Montana consumers.

• “We are pleased the judge rejected this unconstitutional law and hundreds of thousands of Montanans can continue to express themselves, earn a living, and find community on TikTok,” an account called TikTok Policy posted on social media platform X.
• However, the office of Montana’s attorney general signaled it was not giving up on a ban, saying “the analysis could change as the case proceeds,” and noting that it looked forward to “presenting the complete legal argument to defend the law.”
• The ByteDance-owned video platform filed a federal lawsuit against Montana in May, claiming the law “unlawfully abridges one of the core freedoms guaranteed by the First Amendment,” days after the state passed a law to ban the widely popular app across the state. Senate Bill 419, the initial ruling to ban TikTok in Montana from Jan. 1  2024, outlined a concern that the app accessed data against users’ will and shared it with the People’s Republic of China. An additional consideration for the ban was that it promoted dangerous social media challenges that threatened the health and safety of Montanans.
• TikTok’s Chinese links have been a focal point of running controversy in the US, where the app says it has 150 million users. Inadequate protection of minors’ data is another legal fight the platform has been dealing with.

Context: TikTok has continued to face criticism during its rise in the US, but its popularity and ad revenue point to a continued upward trend in use of the app nationwide. Its parent company ByteDance reportedly generated $54 billion globally in the first half of 2023, a figure close to Facebook owner Meta’s $60.6 billion. The video platform also officially launched an in-app e-commerce feature in September.

TikTok has officially launched its e-commerce business, known as TikTok Shop, in the US following months of testing, according to a blog post from the company published on Tuesday. TikTok is making a big bet on monetizing its more than 150 million users in the country, even as it faces increased scrutiny from US authorities.

Why it matters: The largest market for the short video platform, the US also represents the greatest political risk for the Chinese-founded company. TikTok will also encounter stiff competition from larger e-commerce rivals such as Amazon and from Chinese counterparts such as Shein and PDD-owned Temu.

Details: The shopping feature now enables TikTok’s US users to directly complete transactions through in-app links within videos or live streamings, eliminating the need to jump to external websites.

• More than 200,000 merchants have already signed up to sell goods on TikTok Shop during a nearly one-year testing period, with brands such as L’Oréal, Benefit, and Olay either already on board or planning to join TikTok Shop, according to Chinese media outlet Jiemian.
• TikTok offers various features to support content creators, brands, and merchants in enhancing their sales experiences. One such feature allows sellers to collaborate with creators through commission-based partnerships, all within the TikTok ecosystem. TikTok said that more than 100,000 creators have already registered for the Affiliate Program.
• While data privacy remains one of TikTok’s biggest challenges in the US, the company emphasized in the blog post that US user data is protected and stored in the country and managed by the US Department of State (USDS). Payment information for users in the States is also managed by USDS, as TikTok is committed to providing “a safe and secure environment,” the post stated. 

Context: TikTok’s e-commerce push was first launched in Indonesia in 2021, and has since been made available in the UK and multiple countries in Southeast Asia. A previous Bloomberg report noted that TikTok plans to quadruple its e-commerce merchandise sales to $20 billion by the end of this year.

• More than half of US states have banned the use of TikTok on government-issued devices, as the country’s officials and lawmakers have continuously expressed their concerns over the ByteDance-owned app’s sharing of user data in recent years. A US House committee voted in March to give President Joe Biden the power to ban TikTok, but a Reuters report last month said the bill had stalled in Congress.

TikTok is set to expand its online retail business to the US in early August, according to the Wall Street Journal, in a bid to replicate rivals Shein and Temu’s success in the world’s second-largest e-commerce market. The short video app was thought to be ready to launch the service earlier this year, but delayed the move in May amid concerns from merchants over geopolitical tensions, as previously reported by the WSJ.

Why it matters: The move indicates that TikTok is aiming to earn more revenue from its largest audience market, despite continued threats by American politicians over what they see as the firm’s links to the Chinese authorities. The short video operator has reportedly set a goal for its global e-commerce operation to increase its total sales more than fourfold this year to $20 billion.

Details: On a page called TikTok Shop Shopping Center, users can browse and purchase products, though the model differs slightly from its initial plan to establish a third-party sellers’ platform.

• TikTok will store and ship products for Chinese manufacturers and merchants, from clothing and electronics to kitchen utensils, while also being responsible for marketing, transactions, logistics, and after-sales services, according to the WSJ report.
• Under the so-called “full-service model,” which is currently used by Chinese cross-border e-commerce platforms such as Temu, the popular short-form video streaming platform would only pay Chinese suppliers once US-based clients have placed orders to avoid “inventory buildup.”
• TikTok’s first expansion of its e-commerce outside of Asia came in the UK in 2021, but selling products through live streaming or short videos – a popular approach in China – has not fully appealed to consumers in that country.

Context: The short video app, owned by Beijing-based ByteDance, is used by over 150 million users in the US. However, as TikTok steps up its presence in the country’s e-commerce market, it is facing increasingly strict regulatory scrutiny. The Biden administration in March demanded TikTok be sold or potentially face a national ban in its largest market.

• Last September, Temu launched in the US and quickly found success. But it has been in an intense public dispute with Shein, the low-profile fast-fashion giant established in China, in recent months. Temu sued Shein this month in a federal court, accusing it of violating antitrust laws. This came after Shein sued Temu last December, alleging that it had hired social media influencers to defame Shein.
• TikTok’s entry may escalate this competition further, as some of the professional buyers, warehouses, and order managers recruited by TikTok have been poached from these two competitors, according to the WSJ.

TikTok has announced that it has 8.5 million monthly active users in Australia, in the short video platform’s first disclosure of its user numbers in the country. The platform, owned by Beijing-based tech firm ByteDance, also said TikTok is being utilized by 350,000 businesses as a marketing tool to reach and engage new clients in Australia.

Why it matters: The figure suggests that more than 30% of the Australian population is using TikTok. Australia banned TikTok on government-issued devices in April.

Details: Australia joined more than 10 countries (including the US, the UK, Canada, New Zealand, France, Denmark, and India) in banning the use of the ByteDance-owned short video platform on government devices in April.

• Australia’s Attorney-General’s Department said in April that TikTok poses “significant security and privacy risks to non-corporate Commonwealth entities” due to its extensive collection of user data.
• Lee Hunter, TikTok’s Australia and New Zealand general manager, said the company was “extremely disappointed” by the government-level ban, attributing the decision to “politics” instead of facts.
• TikTok set up an Australian branch office in mid-2020 when the video-sharing platform experienced massive user growth in overseas markets. 
• TikTok announced it had 150 million monthly active users in the US three days before a congressional hearing in the country attended by TikTok CEO Shou Zi Chew on March 23, in an attempt to emphasize the platform’s wide reach across the US and counter a potential nationwide ban. 

Context: TikTok has long been questioned by Western countries on whether it shares users’ data with the Chinese government.

• Over half of US states have announced bans on using TikTok on official devices. Montana authorities have announced their intention to begin blocking all residents from accessing the platform from January 2024. TikTok filed a lawsuit against the Montana government shortly after the bill passed in May.
• TikTok is also under scrutiny in Vietnam. The country’s Ministry of Information and Communications stated on Monday that it is holding probes into allegations of illegal and irregular activities by TikTok, and is expected to make a public announcement in July upon completion of the official investigation.
• The Vietnamese government frequently requests social media platforms such as YouTube, Facebook, and TikTok remove content it considers illegal, and regularly reports on the number of links or videos removed by each platform. In April, the information ministry said that TikTok may face a ban in the country if it fails to comply with instructions to remove content it deems to be in violation of its rules, according to local media outlet VnExpress.

CapCut, an all-in-one video editing app owned by TikTok parent company ByteDance, has surpassed 200 million monthly active users, according to a report from Chinese financial media outlet Baijing. 

Why it matters: CapCut’s success comes amid an increasingly hostile climate for China-developed apps in the US and European markets, with ByteDance’s TikTok facing restrictions and investigations on multiple fronts. 

• The figures make CapCut the second overseas-focused product from ByteDance to achieve more than 100 million MAUs.

Details: CapCut was originally developed by Shenzhen Lianmeng Technology, a startup which ByteDance acquired in 2018 for $300 million. Launched as Jianying in China and designed for both mobile and PC, it offers a range of video editing functions, filters, audio and visual effects, and video templates and is compatible for use with TikTok.

• ByteDance released an overseas version of Jianying in April 2020, rebranding it to CapCut in December 2020.
• According to data from Chinese app analysis platforms Diandian and Data.ai in Baijing’s report, CapCut had more than 200 million MAUs in January. That month also saw CapCut enter the top 30 non-game apps list for iOS and Android devices in China. Its global revenue in January was $800,000, with the US market accounting for more than half of this figure. Although CapCut still has a revenue gap to Meitu’s editing tool BeautyPlus, which tops the list with over $2 million in monthly revenue, it has seen impressive growth, managing to achieve significant monetization in just four months. 
• CapCut has largely gained users through in-app promotions on Douyin, the Chinese version of TikTok, and by making its services available for free for two years. Since September 2022, CapCut started charging for premium features, which users can access by monthly or annual subscription packages.
• CapCut Pro’s charges revolve around cloud storage and premium features. The monthly cost of cloud storage is $0.99 for 10GB, $1.99 for 100GB, and $5.99 for 1,000 GB. The premium features are priced at $9.99 for a single month, $7.99 for a continuous monthly subscription, and $74.99 for a full year.
• In October 2022, as part of an update, CapCut launched a PC version, which is compatible with most mainstream social media platforms overseas, making it more attractive to both private customers and enterprise businesses.
• The app also runs a creator recruitment program whereby video creators making popular templates can earn up to $1,000. 

Context: TikTok reportedly set a goal of topping 1 billion daily active users worldwide by the end of 2022, testament to the app’s continued growth even as it faces a number of investigations and restrictions around the world. 

• On Feb. 27, Canada announced that it was banning the use of TikTok on government-owned devices, following similar moves in the US. The ban came just days after the EU announced similar restrictions for its staff. 
• In September, the UK Information Commissioner’s Office (ICO) warned that the ByteDance-owned video platform could face a $29 million fine for failing to protect child privacy.
• Earlier this year, ByteDance moved Douyin vice president Zhi Ying to TikTok to head up the latter’s products and content businesses, as the Beijing-based company looked to involve more of its successful executives in TikTok’s development.

ByteDance has moved Douyin’s vice president Zhi Ying to lead TikTok’s products and content business as TikTok becomes an increased focus of its parent company’s attempts to diversify revenue streams, according to a Wednesday report by local media outlet 36Kr.

Why it matters: Zhi Ying’s move reflects the importance of TikTok to ByteDance’s revenue growth, with the Beijing-based company set to involve more of its successful executives in TikTok’s development. In December, ByteDance also moved Chen Xi, former head of news app Jinri Toutiao, to head up TikTok’s e-commerce product development.  

Details: Zhi Ying worked for PricewaterhouseCoopers and Uber before joining ByteDance in 2016, where she led the operation and marketing of short video platform Huoshan. Later, she moved to oversee Douyin’s marketing and ran the company’s video-sharing app Xigua video.

• Zhi is “very competent and has a strong management style, while also being good at expanding business,” sources told 36Kr.
• Several TikTok managers, including those in charge of user growth, content style, and live-streaming, now report to Zhi, while she herself reports directly to Zhu Wenjia, head of TikTok’s products and technology.
• ByteDance’s revenue growth slowed in 2022 and the daily active user growth of its products was lower than expected, CEO Liang Rubo acknowledged at an all-staff meeting held in December. TikTok’s sister app Douyin has not publicly updated its user base numbers since it announced in September 2020 that it had more than 600 million DAU. 
• TikTok currently has over 1 billion users worldwide, with the short video app having a global penetration rate of less than 20%, while Douyin has reached nearly 54% in China, LatePost reported in October last year, citing a TikTok staff member.

Context: ByteDance is sending more senior executives from China with successful track records to TikTok at a time when US officials continue to heighten scrutiny of the app. TikTok CEO Shou Zi Chew is reportedly due to appear before the US Congress next month in connection with the platform’s privacy and data security. 

• More than 25 states in the US have banned TikTok on government-owned devices and a US House panel is set to vote in February on a total ban aimed at blocking TikTok from operating in the US.
• ByteDance is also seeking to expand into overseas markets with its team management platform Lark due to profitability challenges in the domestic market, Chinese media outlet Jiemian reported in early January.

Finding new revenue streams outside China became urgent for major Chinese online retailers as Covid control measures and a turbulent domestic regulatory environment hurt economic growth and consumer confidence in the country.

Shein, which started as a small cross-border wedding dress supplier, turned into a unicorn worth $100 billion by April 2022, demonstrating a successful path for other shopping platforms trying to sell outside of China. 

Chinese overseas-focused online shopping apps were a bright spot in a year otherwise characterized by high inflation and weak demand in the world’s major economies. 

Fast fashion giant Shein maintained strong growth despite sustainability, imitation, and labor rights controversies, while the more established Alibaba saw its turnover decline in Europe despite narrowed losses in Southeast Asia. Pinduoduo-backed Temu, seemingly out of nowhere in September, shot to the top of the US app downloading chart by the end of 2022. ByteDance-owned TikTok tried to navigate the same successful path as its sister app Douyin in e-commerce, but with less impressive results in the UK.

Here’s what you need to know about the overseas adventures of Shein, Temu, TikTok Shop, and Alibaba in 2022.

Shein

Shein was the most popular fast-fashion brand worldwide in 2022, according to research conducted by price comparison site money.co.uk, which shows that Shein experienced tremendous global growth over the year. The company reportedly surpassed its full-year 2021 sales of $15.7 billion just midway through 2022 and was expected to have made sales of $24 billion by the end of the year.

In April, Shein received a $100 billion valuation from General Atlantic, Tiger Global Management, and Sequoia Capital China, but as one person who declined to invest in Shein at a roughly 30% discount told Financial Times, the firm may well have been overvalued.

The company’s continued problems over environmental and sustainability issues overshadowed its initial preparations for a possible IPO in the US as soon as 2024, as investors increasingly bet on companies that are more responsible in those areas. Shein became increasingly vocal in its commitment to environmental, social, and governance efforts, planning to eliminate a quarter of emissions by 2030 and pledging $15 million to improve factory standards.

Every day, Shein posts thousands of new items for sale and relies on third-party suppliers in China for its low clothing prices. However, the company has faced controversies over appropriating designs from independent and emerging fashion designers. Shein or its Hong Kong-based parent company Zoetop Business Co., have been named in at least 50 federal lawsuits in the past three years, according to a June report by the Wall Street Journal.

In other moves, Shein opened pop-up stores in multiple major cities worldwide in 2022. Local media reported seeing long queues, Shein fans chasing particular items, and limited shopping time due to limited stock. But Shein said it “remains digital-first,” a Shein spokesperson told TechNode.

The buzz around Shein shows no signs of abating in 2023, and the company seems to be expanding its business model, reportedly exploring a marketplace platform that would enable other merchants to sell directly to customers, in a move to compete more directly with e-commerce giants like Amazon and Alibaba-owned AliExpress.

Temu

Less than four months after its launch, Temu, the cross-border e-commerce platform owned by Pinduoduo, has already shown strong appeal with its big discounts and generous coupons, and for most of the past two months, it has been the most downloaded app in the US. 

Temu’s sales growth rate cannot be underestimated. In October, its average daily sales generated more than $1.5 million, reportedly slightly below internal expectations. Temu reached a peak weekly GMV of over $40 million around Black Friday, with sales topping $10 million in the first week of November, according to data provider Sandalwood.

Temu came to the US with super-low prices when the country’s consumers were facing high inflation. Temu’s China-focused sister app, Pinduoduo, has long relied on low prices to quickly capture market share from established retailers like Alibaba and JD. The platform didn’t respond to TechNode’s question on whether its ultra-low prices were sustainable. While gaining fast popularity, Temu is also facing customer complaints about long delivery times, incorrect orders, and “unresponsive” customer services, according to a report by the Time magazine.

Pinduoduo debuted its 10 billion subsidy campaign – in which the company subsidizes high-volume items down to a competitive price compared to other platforms – during 2019’s June 18 online shopping festival, China’s second-largest annual e-commerce event. The initiative became Pinduoduo’s signature and a regular program after it proved to drive user growth.

This significant subsidy is recorded as “sales and marketing expenses” in its financial reports and has remained above RMB 10 billion per quarter since 2021, reaching RMB 14.05 billion, or 40% of total revenue, in the third quarter of 2022.

The marketing-for-growth strategy has resulted in continued user growth for Pinduoduo, with the company achieving an annual profit for the first time in 2021, six years after its founding.

TikTok Shop

In 2022, TikTok expanded its e-commerce business in Southeast Asia, initially finding success in the region, but facing setbacks in Europe.

According to a report by Chinese online media outlet LatePost, TikTok made more than $1 billion in total sales in the first half of 2022 — equivalent to more than half of the RMB 12 billion GMV goal the company set for its e-commerce business this year.

The sales growth achieved by TikTok was mainly driven by its Southeast Asian markets, especially Indonesia — the largest e-commerce market and economy in the region. TikTok Shop already had tens of thousands of sellers in the country, most of whom were micro, small, and medium-sized enterprises, by November 2022, said Desey Muharlina Bungsu, fashion and category lead of TikTok Shop Indonesia, at a TikTok Shop event in November.

The reception in the UK, its first market in the West, was quite the opposite. Different work cultures, as well as market conditions, exacerbated TikTok Shop’s woes. The Financial Times said TikTok Shop had “struggled to gain traction” in the country, reporting that influencers had dropped out of the scheme.

TikTok’s e-commerce business hit $200 million in monthly GMV in the Indonesian market, while only $24 million in the UK, LatePost reported.

Consumers were more receptive to live commerce in Southeast Asia, which helped TikTok find success in the region, with a survey conducted by market research firm Ipsos revealing that 71% of Indonesian consumers had accessed live commerce events, and 56% had made purchases during such events.

However, Shopee and Alibaba-owned Lazada still dominate most e-commerce markets across Southeast Asia. In Malaysia, Shopee holds 71% of the region’s overall e-commerce web traffic, followed by Lazada at 18% and PGMall at 9%, tech news site Tech Wire Asia said.

TikTok Shop made a quiet test debut in the US in November 2022. The short video platform’s ambitions to push e-commerce business in the US market appeared cautious and low-profile, with no officially confirmed full rollout, and only brands or merchants with an invitation code can sign up.

Meanwhile, it remains to be seen how well American consumers embrace the new shopping feature that enables merchants, brands, and influencers to showcase and sell products directly via in-feed videos.

Alibaba

The Chinese e-commerce giant’s overall performance in international commerce retail in 2022 was muted, with revenues in the first three quarters essentially flat compared to the same period a year earlier, up just 1.6% to RMB 31.15 billion.

According to details revealed in the company’s earnings report for the first three quarters of 2022, Trendy, Alibaba’s shopping platform in Turkey, recorded the most significant growth among all other international retail units, maintaining a growth rate of more than 40% in each of the three quarters. A precise order volume was not disclosed.

In the quarter ending September 2022, Southeast Asia-focused Lazada’s order growth posted its first year-over-year decline in orders in two years, which Alibaba said was largely affected by a lifting of Covid-19 restrictions that lured consumers back to offline channels. The platform saw exponential growth in the January to March period in 2021 as the initial Covid wave forced many people to shop online. Despite a slowdown in growth, Lazada managed to narrow the loss per order by 25% compared to last year.

Alibaba-owned AliExpress recently gained notable success in South Korea, with the app ranked first in terms of downloads in the shopping section in the country’s app store, according to Chinese media outlet The Economic Observer, citing mobile data analytics provider App Annie.

A person in charge of the platform’s Korean market told the media that AliExpress currently has nearly 3 million monthly active users, which covers around 10% of the country’s e-commerce users.

But the tech giant said it faces challenges in Europe amid supply chain and logistics issues resulting from the ongoing Russia-Ukraine conflict. Moreover, the EU’s removal of tax exemptions for cross-border packages under 22 euros also hurt AliExpress’s orders.

Although the Chinese e-commerce giant has been in Europe for more than a decade, AliExpress has captured only a small market share in the region, with 4% in Western Europe at 4% (compared to Amazon’s 20%) while holding 5% in Eastern Europe in 2021, according to Reuters.

With less than two months to go until 2023, the wildly short video platform TikTok is reportedly setting a goal of reaching more than 1.05 billion daily active users (DAUs) worldwide by year-end. The platform will have to add more than 200 million DAU to achieve this goal.

A TikTok spokesperson told Chinese media outlet LatePost that the company hopes TikTok to be as dominant in the international market as its Chinese version Douyin in China. Douyin’s market penetration rate in its home market is 54%, while TikTok is less than 20% globally.  

After acquiring Musical.ly in the year of its launch in 2017, TikTok exploded in popularity and became the fastest-growing social app. But despite the rapid growth, TikTok hasn’t earned revenue that matches the size of its user base. ByteDance CEO Liang Rubo acknowledged and said last month that TikTok’s monetization has fallen short of expectations.

Unlike Douyin’s unmatched competitive edge in short video and retail in the Chinese market, TikTok faces heated competition from global giants like Google and Meta. In 2021, the platform raked in nearly $4 billion in revenue, mostly from advertising, while Meta’s Instagram, which has 500+ million daily users, made an estimated $47.6 billion in revenue in 2021.

Why it matters: TikTok has amassed over 1 billion monthly active users in just under five years – faster than Facebook, Instagram, and Youtube to achieve this milestone. But from a monetization perspective, TikTok still pales in comparison to these tech giants.

TikTok almost relied on Douyin to provide technical support at the beginning of its attempt at monetization in 2020, hoping to replicate Douyin’s model in its home market for the international market. However, such reliance has slowed TikTok’s monetization since its product requests often get prioritized after Douyin’s. 

Fierce competition from Google and Meta

Similar to social media competitors like Meta, advertising is a key revenue driver for TikTok.

The company officially launched advertising on TikTok in 2020, but due to an initial lack of independent tech support, coupled with strong global competitors, monetizing progressed slower than expected.

According to LatePost, TikTok’s reliance on Douyin’s tech support caused many of its product demands prioritized after Douyin. It wasn’t until 2021 that TikTok started to build its own advertising and support system.

A TikTok monetization staffer told LatePost that the platform has reached users on a scale comparable to Google and Facebook in major markets, but is unable to provide the same level of precision in customer acquisition. This is partly due to Google apps’ and Android phones’ wide reach, which allows Google to better portray its users, thus helping advertisers target their audience more precisely.

Facing TikTok’s sudden rise, Meta has been betting on its TikTok clone Reels since its launch in 2021. Meta CEO Mark Zuckerberg noted that ad monetization for Reels is progressing faster than expected, crossing the $1 billion annual revenue run rate in the April-June period.

Bringing e-commerce to Brazil

TikTok’s e-commerce business recently planned to move up its timeline of entering the Brazil market, shifting from the second half of 2023 to the first half, LatePost reported.

The report added that Huang Yuanjian, former head of internationalization products at ride-hailing giant Didi Global, will be in charge of marketing operations for TikTok e-commerce in Brazil.

The platform will also face competition in Brazil. Bloomberg data refers to MercadoLibre and Lojas Americans holding 48% of Brazil’s e-commerce market share as of 2021, with other e-commerce platforms having a smaller share. Alibaba, for example, has only a 3.2% market share in the country. In addition, TikTok rival Kuaishou also said last month that it has identified Brazil as a priority region for monetization.

TikTok owner ByteDance is looking to re-enter the Indian market through a partnership with local company Hiranandani Group, nearly two years after being banned in one of the world’s fastest-growing economies, Indian media outlet Economic Times reported on Wednesday.

Why it matters: ByteDance’s effort to re-enter India, if successful, could pave the road for other Chinese companies, including major players such as Tencent and Alibaba, to access a market that’s undergoing rapid growth in mobile internet and one where they have already invested tens of billions.

• ByteDance’s effort to gain access to India through a partnership is reminiscent of some of the solutions international companies have sought when faced with blocks in China. The Chinese government requires foreign companies engaged in “restricted” areas, such as chemicals and machinery like engines and cameras, to set up a joint venture with a local Chinese partner to run in the country.
• Even if Chinese tech giants could make a successful comeback, they would still have to catch up with India’s quickly changing market, which has fostered its own alternatives in the absence of Chinese firms.

READ MORE: INSIGHTS | Does India need China tech?

Details: ByteDance is in discussion with Mumbai-based realty major Hiranandani Group in an attempt to re-enter India, the Indian media outlet Economic Times reported.

• Joining forces with a local company is expected to help ByteDance avoid government scrutiny in India, the company’s second-largest market and a country where it had more than 2,000 employees before being banned in 2020.
• Details of the partnership remain elusive since the talks are still at a very early stage. But ByteDance has informed Indian regulators about its intentions, the report said. A senior government official told Economic Times that there’s been no official approach yet, but that they will examine the requirements when the companies seek government approval.
• Hiranandani Group runs data center operations. A partnership would allow ByteDance to store user data within the country, therefore making it compliant with local regulations.
• ByteDance didn’t respond to TechNode’s inquiries on the matter when reached on Thursday morning.

Context: The Indian government banned nearly 200 Chinese apps from June to September 2020 as China and India engaged in a border conflict. Some of the most popular Chinese apps and services, including TikTok, WeChat, Shein, and Alipay, have remained on the blacklist. 

Chinese company Bytedance has chosen Oracle over Microsoft for a deal involving Tiktok, Bloomberg reported Monday, which will resemble a partnership involving Oracle purchasing a stake in the company rather than an outright sale of the app’s US operations.

Why it matters: Bytedance had no intension of selling Tiktok’s key asset—the algorithm behind the popular video-sharing app. A deal with Oracle, whose executives have a close relationship with the US President Donald Trump, was viewed as a way to increase the company’s odds of winning approval from the White House.

Details: While the talks are ongoing, a deal with Oracle could, for example, take the form of a corporate restructuring rather than an outright sale. In this case, the American software company would take a stake of a newly formed US business while housing Tiktok’s data on its cloud servers, according to Bloomberg.

• The two parties valued Tiktok’s US business at around $25 billion before Beijing announced new rules on limiting technology exports, said sources cited in the report.
• Bytedance reportedly decided not to sell or transfer the algorithm powering Tiktok’s content recommendation function in any sale or divestment deal, the South China Morning Post reported Sunday.
• Microsoft, the other suitor along with Walmart, confirmed in a statement Sunday that Bytedance had turned its offer down. “Bytedance let us know today they would not be selling Tiktok’s US operations to Microsoft… We are confident our proposal would have been good for Tiktok’s users, while protecting national security interests,” the company said.

Context: In late August, officials in Beijing updated a Chinese technology export regulation to ban the export of limited technologies, potentially including those used by Tiktok. Bytedance soon pledged to comply.

• Companies must seek approval from the two ministries before exporting limited technologies, and the decision-making process can take up to 30 days, according to a set of technology export regulations the State Council issued (in Chinese) in 2001.
• Trump ordered a ban barring US companies from doing business with Bytedance after Sept. 15, and is requiring that Bytedance sell or spin off Tiktok’s US operations by Nov. 12.

Bytedance, the company behind popular short video platform Tiktok, will put the company’s users, employees, and vision at the forefront as it attempts to counter the possibility of further bans abroad, CEO Zhang Yiming said in a letter to employees on Monday.

Why it matters: The low-profile billionaire commented on his concerns in deciding Tiktok’s future as the short video app faces a possible ban in the US and swirling rumors that American tech giant Microsoft could acquire its US operations.

• US President Donald Trump, who is expected to further crack down on Chinese software companies, has given Bytedance a deadline of September 15 to negotiate Tiktok’s sale.

Details: Zhang said in the memo that Tiktok is currently engaged in preliminary discussions with an unnamed tech company to ensure the service will still be available to US users. The letter was obtained by Chinese media.

• Zhang said the firm will protect Tiktok’s “uniqueness” and hopes the platform’s user experience won’t be affected by changes that could come with the sale.
• The CEO said that he would take into consideration the interests and career paths of Tiktok’s team when thinking about the future of the short video app.
• Zhang hopes Tiktok’s final settlement will align with the company’s broader vision, which aims to “inspire creativity and enrich life,” he said.
• In the letter, Zhang confirmed that the US Committee on Foreign Investment in the United States (CFIUS), which reviews deals by foreign acquirers for potential national security risks, required Tiktok to sell its US operations.
• The company didn’t seek clearance from CFIUS when it acquired Musical.ly, which was later integrated into Tiktok, for $1 billion in 2017.
• “We still haven’t come up with the final plan, so the public attention and rumors surrounding Tiktok may last for a while,” he said in the letter (our translation).

Context: Along with the rising tensions between China and US, trouble for Tiktok in the US has been brewing for months. Bytedance has been seeking a solution to increased scrutiny of Tiktok’s US operations by pursuing a deal with a possible buyer for the platform.

• Bytedance and Microsoft have resumed negotiations for a buyout of all Tiktok operations in the US after US President Donald Trump said on July 31 he would ban the video-sharing app and oppose the potential deal. 
• Tiktok is also among 59 apps that were removed from app stores in India at the end of June, with the Indian government citing national security concerns. Meanwhile, Japanese lawmakers are also eying a possible ban as security concerns over the Chinese government’s access to user data rises globally.

TikTok announced on Thursday that they are committed to playing its role in the mutual support and giving efforts and provide concrete relief to those most affected by this crisis.

Among the efforts TikTok will be supporting with cash contributions are:

• TikTok Health Heroes Relief Fund: Health care workers are the heroes of this global battle and deserving heroes within the TikTok community. TikTok is providing $150M in funds toward medical staffing, supplies, and hardship relief for health care workers.

• TikTok Community Relief Fund:  To provide critical relief to these communities, TikTok will allot $40M in cash to local organizations that serve groups representative of TikTok’s diverse user communities, including musicians, artists, nurses, educators, and families that have come together on our platform. TikTok will be further matching $10M in donations from their community to support the community. Through this fund, they are supporting programs like After-School All-Stars, where they have already donated $3M to provide food for families who rely upon school lunch programs affected by school closures across the US, and $2M to MusiCares to support artists, songwriters, and music professionals whose livelihoods have been severely impacted as a result of canceled performance and gig work.

• TikTok Creative Learning Fund:  TikTok will be providing $50M in grants to educators, professional experts, and non-profits whose real-world skills and expertise can help spread educational information and useful course material in an accessible, distance-learning format.

Besides the funds above, TikTok is also supporting communities through initiatives that include: 

• Helping SMBs restart and rebuild:  TikTok is committed to helping SMBs weather this crisis, and they will be providing $100M in ad credits to help companies get back on their feet once economies are able to restart normal activity. The program will begin rolling out to markets in the coming months, depending upon the decisions of public health authorities around the world regarding when and how to restart business operations.  

• Contributing to public education efforts:  To facilitate education, TikTok is providing $25M in prominent in-feed ad space for NGOs, trusted health sources, and local authorities, enabling them to share important messages with millions of people and meaningfully engage the TikTok community. They’ve also hosted educational live streams from representatives of the WHO, IFRC, and popular voices for public health and science, like Bill Nye the Science Guy. In addition, they’ve created a range of in-app resources, educational live streams, educational hashtags challenges, and more which can be found on the COVID-19 Resources Page on our Safety Center.

Editor’s note: This is part of our ongoing Tech for Good series, highlighting how Chinese tech companies are helping fight the impact of the coronavirus. To learn more, please visit TikTok’s website.