TikTok's Trendy Bytes feature: A threat to SMEs in the UK and Indonesia


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Aug 18, 2023

Trendy Bytes TikTok is a new feature launched by TikTok in the UK in early July. This feature is in the spotlight in Indonesia because it is considered detrimental to MSME players if it enters Indonesia.

According to the Financial Times media report, Project S TikTok Shop is a scheme where TikTok becomes a wholeseller. The Project S algorithm reads the best-selling items in the UK, then, through TikTok sales, sends these products directly from China. This is considered to threaten the existence of local products.

In the UK, 67 percent of TikTok's algorithms can change consumer behavior from not shopping to shopping. This algorithm can also direct the products they bring from China. These products can also be very cheap.

TikTok can be defined as social commerce. With its Shop shopping feature, TikTok brings together social media, cross-border commerce, and online retail. This can be detrimental to local MSME players because they have to compete with imported products that are sold at very low prices.

According to the Minister of Cooperatives and Small and Medium Enterprises (Menkop UKM), Teten Masduki, if not handled immediately with the right policies, Indonesia's digital market is said to be dominated by products from China. The government only wants foreign or imported products to follow the same rules as domestic products and MSMEs.

However, currently there are no clear rules regarding sociocommerce or the combination of social media and e-commerce, such as TikTok Shop. That way, imported products can still be scattered at TikTok Shop. This can be detrimental to local MSME players who have to compete with imported products that are sold at very low prices.

According to the Ministry of Cooperatives and SMEs, there are dozens of MSME businesses that have gone out of business because they cannot compete in terms of price with imported products being sold. Although this is not part of the direct impact of TikTok Shop's Project S, there are concerns that it will be higher if Project S enters Indonesia.

The Ministry of Trade (MOT) is encouraged to revise Regulation of the Minister of Trade (Permendag) Number 50/2020 concerning Business Licensing, Advertising, Guidance and Supervision of Business Actors in Electronic Commerce (PPMSE). Currently, the regulation only regulates trade in e-commerce, not social commerce.

The Ministry of Cooperatives and SMEs has conducted intensive discussions with the Ministry of Trade, including related ministries and institutions. Teten admitted that the Ministry of Cooperatives and SMEs has officially sent a draft revision of the revision of Permendag Number 50/2020 to the Ministry of Trade.