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Chinese TikTok retailers complain about under-fire platform intensifying US regulatory compliance

U.S. flag is put atop a TikTok logo in this image shot March 20, 2024.

SHENZHEN, China, March 27 (mod1s) - Chinese e-commerce merchants who want to sell items on TikTok Shop in the U.S. as an alternative to Amazon are angered by measures they claim the short video app has taken to tighten enforcement of its regulations for international sellers operating stores on the site.

Chinese-owned TikTok, which faces the threat of having to divest its U.S. 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 mandating that U.S. firms established by sellers be 51% U.S. owned and led by a U.S. passport holder, said the vendors and Winnie Wang, executive chairman of the Shenzhen Cross Border E-Commerce Association, China's biggest sellers association situated in the manufacturing heartland.

Many Chinese vendors had utilized U.S. businesses to be acknowledged as U.S. merchants on the platform but the restrictions mean they will need to be re-registered as international sellers, which they claim get less attention and assistance, placing them at a disadvantage compared to U.S. TikTok dealers.

TikTok, used by over 170 million Americans, has been attempting to find the appropriate balance between chasing fast development and minimizing regulatory concerns.

It has been cranking up its rhetoric that a U.S. effort to ban the platform would rip billions of dollars out of the wallets of artists and small companies, while also striving to catch up to larger competitors such as Shein and PDD Holdings-owned (PDD.O), opens new tab Temu by joining up more retailers.

A TikTok representative stated the firm has clear regulations and criteria for all sellers on its store, including for overseas vendors, and they have not altered since TikTok store was released in the U.S. 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 representative stated, without commenting explicitly on whether overseas dealers got less attention.

The Chinese sellers said they felt targeted by TikTok's policies and some are considering about lowering the efforts they spend into boosting sales on the platform or seeking U.S. partners.

"We're rethinking how much of our time and resources we put into this," said Shenzhen-based e-commerce vendor Jackie Bai.

He and another vendor noted that in contrast, Amazon (AMZN.O), opens new tab does not distinguish between U.S. and foreign merchants on its platform, with everyone having access to its "seller central" and competing equally.

Amazon did not reply to a request for comment.

Bai and two other China-based vendors claimed they learned from TikTok Shop staff that the tightening of the regulations was in reaction to the political sensitivities TikTok confronts in the U.S. in an election year. TikTok refused to comment.

U.S. authorities have questioned the app's security and privacy, claiming user data may be shared with Beijing, but TikTok has stated the business has never shared, or received a request to share, U.S. user data with the Chinese government.

AMAZON ALTERNATIVE Chinese sellers offering items from cosmetics to clothes to housewares have swiftly extended their presence on ByteDance-owned TikTok's shopping platform in the months since its U.S. debut.

"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 advisory organization Impact.

TikTok's U.S. store had a gross merchandise value of $1.67 billion from its inception in September 2023 until the year's conclusion, according to an estimate from data source YipitData.

TikTok stated it does not reveal revenues and did not comment to concerns regarding the veracity of YipitData's predictions.

Sellers claimed they had wanted an alternate outlet to the major e-commerce giant Amazon and were also enticed by subsidies on shipping costs.

Some 50% of vendors on the Amazon marketplace are Chinese, with most concentrated in Shenzhen, said Wang.

These vendors, often small enterprises, submit applications to construct "digital storefronts" and pay fees to the platforms for managing their accounts and for promoting and delivering their items.

Bai started a U.S. TikTok store mostly selling undergarments in October and the site was already providing 20% of his earnings by the end of February, he claimed.

He did not want to identify his firm or items claiming fear of reprisal from the site, but claimed his TikTok shop had prospered when he recruited U.S. actors to market his wares.

Bai stated that a TikTok sales person informed him this month he would have to liquidate his U.S.-based organization and re-register as an international vendor since he is a Chinese citizen.

Bai is now rethinking his approach and is searching for local partners since he feels this might disadvantage him versus other vendors.

"TikTok's shop is so new, the internal rules are changing every week, and these are particularly strict," he remarked.


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