Potential US ban may drive TikTok to focus more resources on Southeast Asia, says observer

For more insight, we speak now to Jianggan Li, he is the founder and CEO of Momentum Works. Mr. Li, welcome to the program. Now, ByteDance has said it would invest billions of dollars in Southeast Asia over the next few years. With this potential ban in the US, what ripple effect will this have on TikTok in Southeast Asia? I think some of the concerns that the US legislators voiced are actually legitimate, right? Because TikTok does have huge influence on users' habits and how they consume data. That said, I think TikTok has been very willing to work with legislators and regulators in each country to actually work out some of the concerns. So I do think that the issues that they're facing in the US are largely driven by geopolitics. And currently, most of the Southeast Asian countries will try to stay out of geopolitics. So I do think that from a regulatory point of view, TikTok would probably not face the same challenge as they were facing in the US. But from a resource planning point of view, I think if eventually they are cut off from the US, they might choose to focus more resources on Southeast Asia, which I think is one of their largest markets. So, you know, it's been said that leaving the US market can be seen as putting a spanner in the works for TikTok's expansion plans. Can TikTok look to Southeast Asia, though, to replace its US market? Obviously, I think in terms of consumption power, in terms of user base, I think the US is still a large market that TikTok doesn't want to miss. Southeast Asia collectively would not be as big as the US in terms of, I mean, how much advertising dollars and also how much like e-commerce goods they can sell on the platform. But I think at the end of the day, if they don't have a choice, they will probably deepen their operations in Southeast Asia, as well as other regions which are still somehow friendly towards TikTok. OK, so we are not seeing a full, complete ban yet of TikTok in Southeast Asia, but there have been complaints. Malaysia has complained about misleading content, Indonesia about its impact on small businesses and Vietnam about toxic content. Are these concerns legitimate? And what has ByteDance done to address this widespread scrutiny across the region? I think TikTok grew in popularity very fast across different countries in the world. And of course, I mean, from an organisation point of view, how do their content operations, how do their government relations and all these different kinds of business aspects catch up with the growth of content production and consumption on the platform? I think this has been a challenge for TikTok. And so if you look at this region, I think TikTok is probably the only major tech company which is still aggressively hiring talent because they do need a lot of people to deal with all these issues. And I do think they're very willing to work with the governments on this kind of issues. The challenge is that the platform is very big and there are lots of people producing content and lots of people consuming content on the platform. So there will always be a catch up and that may need to do. But I think with the current challenges, the current concerns being voiced, they'll probably devote even more resources to make sure that they're compliant in each of the countries they're operating in. OK, and zooming in on Indonesia, Southeast Asian nation, it has the biggest number of audience, reportedly around 125 million users. It's banned e-commerce over social media platforms. Who's hurting the most by this ban, TikTok or Indonesians? We are looking at small businesses or vendors. I do think that TikTok has an algorithm driven way to distribute traffic and also to distribute the buyer base towards merchants. So before the ban, I do think that TikTok let the algorithm run, which vendor gets most of the consumer traffic. So because of that, I think many vendors benefited, but lots of vendors who do not know how to operate the content platform properly, probably got hurt by the operations. I think after the ban and after the restatement that they did in December last year, the platform has become much more conscious in sort of how do they run a marketplace where ordinary SMEs also benefit from the audience that they can potentially acquire on a platform. But I think that would be a journey because it's a vast country with thousands of millions of SMEs. So how do you make sure that everyone benefits from the system is actually an ongoing challenge, I think. OK. And speaking of ongoing challenge, earlier this year, chief executive Leung Rui-bo said ByteDance has become slow and inefficient in the face of increased competition globally, saying that staff are lacking a sense of prices. TikTok's fate is currently hanging in the balance in the U.S. But what would the sale or rather the potential sale of the app mean for TikTok's competitors? I do think that we're still too early to tell what would be the benefits or potential consequences to its potential competitors. So for example, Timo, a Chinese cross-border e-commerce app, which has been very popular in the U.S. at the moment. So they would probably benefit from the ban of TikTok because TikTok has been pushing a lot TikTok Shop, which is a direct competitor of Timo. But Timo is also a Chinese app. So would they face the same scrutiny after TikTok is banned in the U.S.? So these are the secondary and second-degree consequences, which are still too early to tell. And we know that it's the election year in the U.S. and a lot of things could happen and the political map would be rejoined. So a lot of things are uncertain at the moment. And American users, they are saying that TikTok represents much more than a platform where young people can catch up on the news. It is where they go to find connection, get entertainment, and for some, even earn a living. So how challenging do you think it is to shift a loyal audience from one platform to another? I do think for the content creators, the challenge will probably not be very high because the rivals like YouTube and Facebook would already have similar offerings to the content creators. But probably they need to look at the terms because now if TikTok as a competitor is driven out of the market and the terms for the content creators might not be as generous as they would have offered if there was competition. So I do think that, and also for the small businesses, and I think if many of them have invested a lot in how to do e-commerce online, I think there would be a painful adjustment because operating on other kinds of traditional e-commerce platforms would be very different compared to operating on TikTok shop. Mr. Li, before we go, where else can TikTokers go? What other options are there for TikTok users? I think obviously you have the other social media platforms. You have the Facebook, you have Instagram, you have YouTube where you consume content. I think in terms of algorithms, none of them is actually as sophisticated as TikTok in terms of feeding you the video that you actually want to watch. But I do think that users would adapt to a new situation if TikTok becomes available. And that's what happened in India a few years ago when TikTok was banned. And I do think that TikTok or ByteDance as an organization, they are also very adaptable. If they have no other choice, they will probably try to develop other markets to compensate for the lack of U.S. access. Mr. Li, we really appreciate your perspectives. Thank you so much for speaking with us. That was Jianggan Li, founder and CEO of Momentum Works.