TikTok and GoTo invested $1.5 billion in an Indonesian retailer
By MYBRANDBOOK
In order to enable the relaunch of its shopping app in Indonesia, TikTok, owned by ByteDance, plans to invest $1.5 billion in a joint venture with GoTo Group in Indonesia. Through the partnership, TikTok will own a 75% controlling stake after merging its Indonesian TikTok Shop with GoTo's Tokopedia. By taking this calculated risk, TikTok is able to overcome regulatory obstacles and continue offering its online buying business.
In September, Indonesia came up with some regulations that compelled TikTok to split payments from shopping in the country — a separation that prompted TikTok to halt its online-retail service just as it was gaining traction against Sea Ltd. and GoTo.
In order to protect the smaller enterprises, the Indonesian Government has banned sales on social media and it has also signaled that it is approving TikTok and GoTo’s new pact.
TikTok Shop is the fastest-growing feature for Beijing-based, closely held ByteDance, which is seeking new revenue sources beyond its popular social media service. It has targeted the online-shopping market of Indonesia, a country of 278 million, as a template for a global expansion from the US to Europe.
"TikTok has committed to invest over $1.5 billion in the enlarged entity over time, to provide future funding required by the business, without additional dilution to GoTo," according to the company statement.
"TikTok, Tokopedia and GoTo will transform Indonesia's ecommerce sector, creating millions of new job opportunities over the next five years."
As per GoTo, a pilot will be rolled out by the partnership under the supervision of regulators and it expects that the deal will be closed in 2024.
Tokopedia will receive a $1 billion promissory note from TikTok upon the completion of the deal that can be used for future working capital needs, GoTo said.
They will launch the first campaign under this partnership on both TikTok and Tokopedia on Tuesday, coinciding with Indonesia's national online shopping day.
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