“The only important factor here is: whether Shopee is able to build an effective organisational and execution structure in each market.”
Yusuf Yu, on whether Shopee can be an international company
We had previously talked about the global dreams of ByteDance, and the cultural challenges it faced in TikTok’s global operations. Nonetheless, the company is learning fast, and more importantly, very committed to its expansion. In Indonesia, one of TikTok’s first two ecommerce markets outside China, ByteDance already employs more than 1000 people, most of whom working on TikTok Shop.
It seems they wanted to reach more than half of Shopee’s order volume by the end of this year – a very aggressive target that requires a lot of subsidies and free shipping.
In the recent layoffs of Shopee, ByteDance also seems to be the main beneficiary, as it still had hundreds of extra headcounts to fill in Singapore, in areas where these ex-Shopee employees are good at.
Shopee, on the other hand, seems to be in a deep crisis. It went through a round of layoffs in June. We also highlighted the macro and companies logic on why tech companies are lying off workers after the pandemic gains.
Apparently, it was not enough.
In August, it cancelled the offers of a number of people due to commence their employment in just days. The news that one guy, who just arrived in Singapore with his wife and dog, received the offer-cancelling call from HR at the airport was making rounds in the media.
And just yesterday, Shopee announced it was exiting Argentina, and shutting local operations in Mexico, Colombia and Chile, leaving only the cross border business. This meant amongst all the new markets Shopee entered during the pandemic (France, Spain, Poland, the Latam quartet, and India), only Poland is still running.
When Sea Group raised US$6.3 billion last September to expand globally, we commented that “The only important factor here is: whether Shopee is able to build an effective organisational and execution structure in each market.”
There were lots of comments about Shopee’s technical aspects (shipping price for example) or product features – which we did not think were important at all. If the leadership, people and organisation are well taken care of, product (and features) can be iterated to adapt quickly to the specific market(s).
Shopee, which has been operating in multiple countries since the onset, is much better placed compared to many of its Chinese counterparts (such as Alibaba, Tencent and Didi) in this global expansion. They have the people and organisational flexibility to be able to fit into each new market, quite nicely. Also, Shopee leadership was known to dedicate enough mental space on each aspect of the business.
However, the sheer breadth of new business areas and new markets became apparently too much for the leadership’s mental space. In particular,
- how can you make correct decisions simultaneously on markets which are 12 hours apart in timezone and 20 hours apart in flight time?
- how do you ensure that top lieutenants in the market have enough power to fight the battle, but not do it too recklessly which ruins the long term prospects?
These issues could be fixed if more time is given. And the lessons learnt during the current challenges of Shopee are no different compared to those learnt by many Chinese tech companies in their global expansion.
This is one of the many lessons in our book – “Seeing the unseen: Behind Chinese Tech Giants’ Global Venturing” which is now available in bookstores and online (yes ahead of schedule!).
You can get the book from major bookstores in the US, Singapore, Malaysia and Thailand. Wiley is working to make the book physically available in other countries – and you can also order online from Amazon or Wiley – we will update you when the Kindle version becomes available.
Happy shopping this 9.9!
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Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at [email protected].
