TEMPO.CO, Jakarta - Izzudin Al Farras Adha, an economist from the Institute for Development of Economics and Finance (Indef), said that product sold in the Tiktok Shop from China is cheaper than products from MSMEs. There are a number of reasons for this, including China's relatively cheap labor costs when compared to other countries.
"The price of goods [sold at the Tiktok Shop] is much cheaper because they are sold directly by users from China, compared to local MSME products, especially related to skincare," Farras said during an online discussion on Monday, July 24.
The developer of Tiktok is Bytedance, a company from China, one of the world's largest economies
Farras said that Tiktok has a large amount of data that allows it to know users' preferences. For example, the market for skincare product users in Indonesia. "These social commerce use the data to produce themselves. This is what is done at the Tiktok Shop," said Farras.
Moreover, Farras said that China's labor costs were relatively cheap compared to other countries, allowing for lower cost of production.
He added that Tiktok is also still on the stage of burning its investors money. "Thus, [it has the advantages of] cheap production cost, shipping costs are often free, plus there are no specific regulations in Indonesia."
Farras said that Indonesia is the second largest Tiktok user in the world after the USA as of April 2022. He said that the Indonesian government needs to be more concerned with Tiktok.
"Because last year alone, Tiktok's global sales US$2.5 billion (around Rp375.5 trillion). Specifically in Indonesia, last year it was Rp228 billion," he said.
AMELIA RAHMA SARI
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