Shopee parent company may be in trouble because it is banned in India

Shopee parent company may be in trouble because it is banned in India

If it is banned from operating in India, the globalization ambitions of parent company Sea will face many obstacles.

After the ban with 54 Chinese apps and games such as Garena Free Fire, CuteU Pro, Isoland 2: Ashes of Time Lite, Rise of Kingdom, SmallWorld..., the All India Traders Union (CAIT) continued to call called the government of this country to issue more bans on Shopee.

"It's surprising that Shopee is not on the list of banned apps, even though it has the same parent company as Garena Free Fire and is owned by Tencent," CAIT Secretary General Praveen Khandelwal posted a comment on the website. on Twitter with the hashtag "#BanChineseShopee".

For Mr. Praveen Khandelwal, Shopee "is a Chinese company". Garena Free Fire is owned by Singapore-based Sea and Tencent is the majority shareholder. Sea presents itself as a global consumer internet company incorporated in Singapore. Tencent's shadow appears not only in the pouring of investment capital, but many of Shopee's core technologies are said to be closely tied to the company from China. Recently, Tencent Cloud put out a press release and explicitly mentioned Shopee using their suite of live video and audio solutions.

The Economic Times quoted a statement from Tencent Cloud in March last year saying that Shopee Live's e-commerce live broadcast and Q&A programs are carried out at the same time, thanks to the resources provided by Tencent Cloud.

CAIT Secretary General Praveen Khandelwal worries consumer data is being consolidated in China through apps. India needs to take a holistic view, otherwise it will in the long run hand over promising businesses to foreigners.

In an earlier letter to the Ministry of Finance and Ministry of Commerce, CAIT claimed that Shopee had infiltrated India under a "complicated structure" to "defraud" the government, in violation of the provisions of the law. .

Outside Shopee's headquarters in Singapore, May 2021. Photo: Reuters

Outside Shopee's headquarters in Singapore, May 2021. Photo: Reuters

Shopee quietly landed in the Indian market last year. To date, it has more than 35,000-40,000 orders per day. According to Moneycontrol - India's largest financial news website, in a short time, Shopee has doubled its operation scale, gathering a large number of orders.

Every day, this e-commerce platform has 4 super promotion hours with items reduced to 3,000-60,000 VND. This platform also offers free shipping for customers. However, this strategy does not seem to work in the company's favor as allegations of counterfeit products appear more and more.

Even if the Indian government has not immediately issued a "red card" to Shopee, its expansion plan in the billion-people market will also be difficult, not to mention competing with Amazon and Flipkart - two retailers. Online is dominating the market. The Chinese factor could have an impact on the above plan if the Indian government quickly turns its back and takes concrete action.

Not to mention that Shopee is banned, India's ban on the Garena Free Fire game has dealt a huge blow to Sea. LightStream Research analyst Oshadhi Kumarasiri said: "The Free Fire ban could bring Sea two negatives at the same time as lower digital entertainment profits and limit Sea's ability in the future. funding Shopee's expansion".

The Free Fire ban could affect revenue between $78-104 million per quarter, he said. This analyst also said that it is likely that India will issue a similar ban on Shopee and affect 300 employees working and 20,000 active sellers.

In the immediate future, Sea's share price in New York dropped more than 18% after the bad news, evaporating $16 billion in market capitalization. Generally from October 2021 up to now, SEA stock has lost two thirds of its value. Soon after, founder Forrest Li reassured shareholders that Sea was under control. He told Bloomberg that the business will protect the privacy and security of users in India and globally. "We do not transfer or store any Indian data back to China," he added.