BEIJING, December 21 (TMTPost)— ByteDance Ltd.’s mainstay overseas unit TikTok seems to become more important for the Chinese internet giant.

Credit：Visual China

TikTok aims to make the gross merchandise value (GMV) of its e-commerce business hit US$50 billion during the year 2024, more than doubling from the target of US$20 billion for this year, 36Kr learned.  The Chinese news media outlet also learned the e-commerce GMV in Southeast Asia to date of the year has topped US$13 billion, accounting for 65% of TikTok’s annual target. Among Southeast Asian markets, Indonesia, the region’s biggest economy, contributed more than US$4 billion of GMV, and about US$3.5 billion came from Thailand, the leading economy in the region second to Indonesia.

ByteDance didn’t respond to the report.The data, if it is accurate, will only underline how robust TikTok’s commerce business is growing since the short video app platform entered into the sector in 2021. Its e-commerce generated US$4.4 billion in Southeast Asia alone, compared with around US$1.0 billion of total GMV in the beginning, 36Kr noted. TikTok could have raked in almost US$15 billion in Southeast Asia if the Indonesian government had not impose a ban more than two months ago. TikTok was said to suffer at least US$1 billion of loss due to the temporary shutdown of e-commerce in Indonesia.

The Ministry of Trade of Indonesia announced late September that the government doesn’t allow transactions on social media platforms, which effectively bans users from buying or selling products or services on TikTok and other social media platform. The ministry said social media companies will also be prohibited from doubling e-commerce platforms to prevent misuse of public data., and it will work to further regulation on e-commerce in the country. TikTok then stopped facilitating e-commerce transactions on TikTok Shop Indonesia,its local e-commerce division,October 4, and resorted partnership with Tokopedia, Indonesia’s biggest e-commerce platform under the local technology heavyweight GoTo Group, to restart its local business. According to a statement on December 11, TikTOk has committed to spend over US$1.5 billion in a new venture that combines Tokopedia and  TikTok Shopping Indonesia. Under the strategic partership agreement, TikTok will initially pay US$840 million to take 75.01% stake in the new venture and GoTo will hold 24.99%.

The deal, as the first such arrangement by TikTok, could become a new model for overcoming regulatory setbacks and government opposition. TikTok and GoTo said they will start their strategic partnership with a pilot period carried out in close consultation with and supervision by the relevant regulators The new partnership got the odd from Indonesia's Trade Minister Zulkifli Hasan. The official said his ministry will give a three to four months period for trial as technology is not an easy thing, and more effort could be needed for perfection. He added the main purpose of the trial is to help sellers so they can resume their operations after suspension of TikTok Shop.

Besides Indonesia, the United States is another major market for TikTok e-commerce. The daily sales in U.S. surged to US$10 million in October, up from more than US$300,000 in May. The Black Friday shopping event saw TikTok’s GMV in the country even surpassed US$33 million on November 24, according to FastMoss, an analystics tool. TikTok’s GMV target in 2024 seems not too aggressive given resumption of e-commerce business in Indonesia and local partnership, along with the momentum in the U.S. market.

The reported annual GMV target is another sign that TikTok plays an increasing role in ByteDance’s top line. News earlier this year suggested while the Chinese tech titan gets a bulk of revenue from China, where it operates TikTok’s sister app Douyin, overseas operations, especially TikTok, are helping drive its growth.  

The Information reported in August that ByteDance recorded revenue of US$85 billion last year with a 38% year-over-year (YoY)  increase, while revenue from China grew to US $69 billion with at growth rate of 25%, about one third of annual growth for the year 2021, as growth in the market had slowed to 68% that year, down from rates of 150% and 105% in 2019 and 2020 respectively. In comparison, TikTok as well as video games, softwares and other overseas businesses contributed US$16 billion last year, more than doubling US $6.5 billion of sales in 2021. These overseas operations only generated US$1.2 billion in year 2020.

In the quarter ended June, markets outside China contributed US$5.8 billion, or about 20% of ByteDance’s total revenue, and the most majority came from TikTok, which likely generated at least US$5 billion, The Information cited people familiar with the figures last month. The U.S. tech media outlet learned that ByteDance’s revenue in the second quarter jumped 40% YoY to US$29 billion. If the data is accurate, TikTok parent should have delivered a much robust growth and its quarterly sales have overtaken Tencent. Tencent’s revenue rose 11% YoY to RMB149.2 billion (US$20.6 billion) in the quarter ended June 30, missing the Wall Street expectation of RMB152.021 billion.

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