Chinese e-commerce vendors that want to sell products on TikTok Shop in the US as an alternative to Amazon are upset by moves they say the short video app has made to tighten enforcement of its rules for overseas sellers opening shops on the platform.
Chinese-owned TikTok, which faces the threat of having to
divest its US operations or be banned, has in recent weeks taken a harder
stance toward enforcing its internal rules, according to five Chinese vendors
on the site and an industry association that represents 3,000 Chinese stores
selling products online.
TikTok is requiring that US entities registered by sellers
be 51 per cent US owned and chaired by an US passport holder, said the vendors
and Winnie Wang, executive chairman of the Shenzhen Cross Border E-Commerce
Association, China’s largest sellers group based in the manufacturing hub.
Many Chinese sellers had used US entities to be recognised
as US merchants on the platform but the rules mean they will need to be
re-registered as overseas sellers, which they say receive less prominence and
support, putting them at a disadvantage compared to US TikTok sellers.
TikTok, used by about 170 million Americans, has been
seeking to strike the right balance between pursuing rapid growth and managing
regulatory risks.
It has been ramping up its rhetoric that a US move to ban
the platform would take billions of dollars out of the pockets of creators and
small businesses, while simultaneously seeking to catch up to bigger rivals
such as Shein and PDD Holdings-owned Temu by signing up more merchants.
A TikTok spokesperson said the company has clear policies
and requirements for all sellers on its shop, including for international
sellers, and these have not changed since TikTok Shop was introduced in the US
in September 2023.
“TikTok maintains robust policies to protect customers and
promote a trustworthy shopping environment, and we continually strengthen how
we enforce our rules,” the spokesperson said, without commenting specifically
on whether international sellers get less prominence.
The Chinese vendors said they feel targeted by TikTok’s
rules and some are thinking about reducing the resources they put into pushing
sales on the platform or finding US partners.
“We’re rethinking how much of our time and resources we put
into this,” said Shenzhen-based e-commerce seller Jackie Bai.
He and another seller said that in comparison, Amazon does
not differentiate between US and other sellers on its platform, with all having
access to its “seller central” and competing equally.
Amazon did not respond to a request for comment.
Bai and two other China-based sellers said they heard from
TikTok Shop representatives that the tightening of the rules was in response to
the political sensitivities TikTok faces in the US in an election year. TikTok
declined to comment.
US officials have criticised the app’s security and privacy,
suggesting user data might be shared with Beijing, but TikTok has said the firm
has never shared, or received a request to share, US user data with the Chinese
government.
Amazon alternative
Chinese vendors selling products from beauty to clothing to
housewares have rapidly grown their presence on ByteDance-owned TikTok’s
shopping platform in the months since its US launch.
“Almost every single consumer tech company I know based in
China, and every Chinese consumer tech client we serve, is selling on TikTok,
and those who are not selling are considering how and when to begin selling on
TikTok,” said Chris Pereira, CEO of business consulting group Impact.
TikTok’s US shop posted a gross merchandise value of US$1.67
billion from its opening in September 2023 to the year’s end, according to an
estimate from data provider YipitData.
TikTok said it does not disclose sales and did not reply to
queries about the accuracy of YipitData’s estimates.
Sellers said they had sought an alternative channel to the
dominant e-commerce giant Amazon and were also drawn by subsidies on delivery
costs.
Some 50 per cent of sellers on the Amazon marketplace are
Chinese, with most concentrated in Shenzhen, said Wang.
These vendors, typically small businesses, submit
applications to create “digital storefronts” and pay fees to the platforms for
servicing their accounts and for advertising and delivering their products.
Bai opened a US TikTok shop largely selling undergarments in
October and the platform was already generating 20 per cent of his revenues by
the end of February, he said.
He did not want to name his business or products citing fear
of retaliation from the platform, but said his TikTok store had thrived after
he hired US actors to promote his products.
Bai said that a TikTok sales representative told him this
month he would have to close his US-based entity and re-register as an overseas
seller because he is a Chinese citizen.
Bai is now reconsidering his strategy and is looking for
local partners as he believes this would disadvantage him against rival
sellers.
“TikTok’s shop is so new, the internal rules are changing
every week, and these are particularly strict,” he said. REUTERS
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