Chinese online marketplace Temu has enjoyed explosive international growth off the back of an eye-catching and often absurdly cheap range of products, but those cut-price tactics have met increasing roadblocks as it seeks to conquer new markets in south-east Asia.

Indonesia ordered Temu to be taken down from app stores in October, a move it said would protect the country’s smaller merchants. Last week, Vietnam threatened to ban Temu and fellow Chinese-owned fast-fashion outlet Shein by the end of the month, saying they had not been approved to do business in the country.

The flood of cheaper Chinese-made products – often with minimal import taxes – has damaged local vendors and manufacturers, who cannot beat the speed, quality or prices offered online, according to Simon Torring, co-founder of market insights firm Cube.

“Temu has become the lightning rod for every regulator, everywhere now getting worried about whether cross-border import rules should be changed,” he said.

Poom Chotikavan, director of operations at Taksa Toys in Thailand, has struggled to find a local manufacturer to make children’s toys because so many suppliers have gone out of business. Nearly 2,000 Thai factories across all industries closed and more than 50,000 workers lost their jobs in the last financial year, Reuters reported, in part due to greater Chinese competition and higher costs.

“It’s never been easier to source products from China [so] their sales have just been obliterated,” Chotikavan said. “How will they survive in this landscape where their clients can just reach out to [Chinese] factories?”

Temu’s Chinese equivalent, Pinduoduo, has operated since 2015, with the global platform launching in the US in 2022 and sweeping European markets the following year. Temu has been expanding its presence in south-east Asia, starting with the Philippines and Malaysia in 2023 then Thailand, Brunei and Vietnam this year.

Rising consumerism from south-east Asia’s burgeoning middle class has made the region an ideal market, with online shopping sales nearing $160bn in 2024, according to Bain & Co analysis published in November.

That boom came at the right time for Temu to chase international growth, as a slowing Chinese economy saw domestic customers cut back on Pinduoduo purchases, according to Jianggan Li, chief executive at venture firm Momentum Works.

“In China, the growth is stagnant compared to 2010s and yet it’s very competitive, so players need to find other avenues to grow [such as] overseas markets,” he said.

But the slowdown has also left Chinese factories with spare capacity, pushing Temu’s main suppliers to sell at high volumes and low costs and giving the marketplace a boost as it pushed its way in.

‘Mind-blowing how cheap it is’

Just as it has in western markets, Temu paired those cheaply produced goods with massive discounts and an increasingly aggressive advertising campaign, while keeping shoppers hooked through a gamified experience of prize wheels and countdown timers.

It has reached hundreds of thousands of customers, including Chotikavan, who bought a MagSafe iPhone holder for his car on Temu for $3, less than a seventh of the price it would have cost otherwise.

“The products are getting way cheaper, but the quality is quite decent,” he said. “It’s mind-blowing how cheap it is.”

It’s the same story across south-east Asia. Woven straw satchels available for $3 on Temu are sold by local vendors in Indonesia for six times the price. Jackets sold in Vietnamese markets for $15 are available on Temu at the same price and with free shipping.

While consumers enjoy the increased access to cheap goods, local businesses want their governments to act.

Indonesia has taken the firmest stance, boosting taxes and banning e-commerce on social media platforms in 2023, which forced TikTok Shop to buy into a struggling local competitor to continue operating. While a ban would protect local manufacturers and higher taxes would add to government coffers, Temu would seek to push its way in regardless, Torring said, pointing to the platform’s repeat applications to enter Indonesia despite constant refusal.

“It’s signalling to other markets: ‘if it’s easy, we will come. If it’s hard, we will still come. You show us the rules, you show us what we need to do, but we will come,’” he said.

“Their mandate is ‘take the world’.”