Is Shopee really in decline?

This article was originally published in Chinese on Momentum Works’s Wechat account, translated into English here by the team. 

On Tuesday (9 August), Chinese tech media outlet Pingwest published an article called “Behind Shopee’s decline: the globalisation chaos of a Southeast Asia that most resembles a Chinese tech giant”. 

Since then, at least 60 friends have reached out to MW colleagues through various channels with the following questions:

“Are these issues real?” “Is Shopee really so chaotic?” “I thought Shopee was different compared to Chinese giants, but it ends up the same?” etc. 

It is a big topic – those who have access to YouTube can watch Momentum Academy’s recent sharing “Off the record: Behind Shopee’s doors”, where we discussed Shopee’s leadership, strategy and culture. You can also read a recap of the sharing here. 

Here are some thoughts we have about the Pingwest article: 

1. First, we do not really agree with the notion of “Shopee’s decline”: raising billions right before the winter, cutting non-performing Indian and Spanish ventures; layoffs to focus on efficiency – all these seem to be right and timely decisions. On the ground, aside from retreat from non core businesses, the ecommerce part does not seem any obvious sign of decline – of course, we should wait for the quarterly results, due to be released next week;

2. Shopee’s many problems have not surfaced during its fast growth phase – I think everyone knows about it. The problem is: during the fast growth phase, how much of the management’s attention should really be focused on optimisation and solving detailed efficiency problems, or should they really store enough ammunition to solve efficiency problems in winter – we trust that different people will have different answers to this question. For Shopee, it seems they have chosen the latter;

3. There had been a lot of concerns about Shopee’s parent Sea Group at its IPO – many early employees were not happy with the leadership and how certain decisions were made. Partially because of that, those who did not believe the company had a future sold their shares before the start of share price take-off in 2019. However, that was a problem largely with Garena – Sea’s gaming arm – which seems to have a different culture and leadership style compared to Shopee. The bigger problem is Sea’s entire strategy and whether Garena can pull off another Freefire-level success – this topic warrants another, more detailed assessment;

4. The Pingwest article mainly featured interviews on product and development teams based in Singapore. Many of the judgements (e.g. “the split between Chinese and Singapore teams are deteriorating”)  are based on the opinions of the Singapore-based employees interviewed. However, those who are familiar with Shopee’s growth trajectory should know that it was not because of product or technical capabilities, but clear strategy and localisation of leadership/organisation/talent. In comparison, Lazada’s product and tech talent is often much stronger than their Shopee counterparts;

5. In product and development, Shopee has a lot of catch up to do. Relying on expanding the Singapore product/tech team is not sufficient – mainland China is the best option for them. Lazada’s R&D teams are largely in Shenzhen and the Yangtze River Delta as well;

6. It is true that there was significant turnover in Shopee in the past year, not only in product and development teams. A core reason is the pain that surrounds its size and the fact that its stock price has been hit. The article said “the management has almost all been replaced”, which is not true. The core leadership team of Shopee seems to be entirely intact;

7. Many of Shopee’s junior and mid level managers have been poached by other tech majors in Southeast Asia, but Shopee does not seem to care about this. The big picture is that in Singapore as well as the rest of Southeast Asia, tech and internet have become an acceptable and even desired career path for young people – many ventures Momentum Works has involved in give the feedback that hiring has indeed become easier in the past year or so;

8. For fresh graduates, Shopee might not be a very good career choice, though. This is because Shopee is big enough – and there isn’t as much room for promotion for junior level people as compared to three or four years ago. However, this problem is not unique to Shopee – all tech majors and MNCs have similar problems, just different in size and manifestation;

9. In the article it mentioned “Many so-called successful Singapore companies in Southeast Asia did not actually start in Singapore” – is this really important? Singapore has provided a regional or even global environment, neutral stance in the current geopolitics, and a full supporting ecosystem. Maybe the better question to ask is “Why so many companies, which did not start in Singapore, moved their headquarters to Singapore when they became sizeable?”

10. For us in the industry, we of course hope the whole sector – including Shopee, Lazada and Tokopedia – will grow together in healthy competition, and eventually become global companies; 

Much of the experiences and lessons learnt are covered in our new book “Seeing the unseen: behind Chinese tech giants’ global venturing”, which will be published by Wiley in September. 

You can pre-order the book on Amazon. 

We welcome thoughts, comments and debates about Shopee and the general theme of emerging market tech expansion, you can email us at hello@mworks.asia.