Shopee shuts India operations citing 'global market uncertainties'

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A Shopee spokesperson told CNBC-TV18 that the company decided to close its 'early-stage Shopee India initiative' in view of global market uncertainties.

"During this period of transition, we will focus on supporting our local seller and buyer communities and our local team to make the process as smooth as possible. We will continue to focus our efforts on delivering a positive impact to our global communities, in line with our mission to better the lives of the underserved through technology," the spokesperson said.

Incidentally, Sea, which runs Shopee is also the same company that owns and runs the popular mobile gaming app Free Fire which was banned in India in February 2022 when the government banned 54 Chinese apps citing national security reasons. The ban led to shares of Sea plunging wiping out over $16 billion in value.

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While Sea is a Singaporean company, the company was founded by a Chinese-origin Singapore national Forrest Li Xiaodong. Further, Chinese investor Tencent holds an 18.7 percent stake in the company. Trader body Confederation of All India Traders (CAIT) claimed that SEA uses the Tencent cloud to store data.

As per reports, when launched, Shopee recruited around 300 employees and onboarded over 20,000 local sellers in India. It is unclear what happens to the 300 employees. Reports had suggested that sellers began scaling down inventory after the ban of Free Fire so as to not face a repeat of what happened with Club Factory and Shein.

Shopee's India exit also comes close on the heels of the company exiting its operations in France on March 6 just months after it entered the market in October 2021.

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Shopee’s short-lived presence in India wasn’t entirely smooth. The e-commerce platform faced resistance from CAIT which called for a ban on the platform late last year alleging predatory pricing and accusing it of being a Chinese company.

CAIT also moved the Competition Commission of India in January 2022 with similar allegations of predatory pricing, deep discounting, and violation of the Competition Act, 2002. It also called for a ban on the app after the government banned 54 Chinese apps in February. However, CCI rejected CAIT’s complaint observing that it is a new entrant and doesn’t possess significant market power.

After the company decided to exit the Indian market, CAIT, in a statement, welcomed Shopee’s decision.

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"CAIT first raised its voice when it sent a communication to Prime Minister Shri Narendra Modi demanding the ouster of Shopee owned by SEA group which has substantial Chinese investment violating provisions of Press Note No.3 (2020) revising the FDI policy to require that any foreign direct investment from neighbouring countries to India (with whom India shares land boundaries) would be allowed only after obtaining the prior approval of the government," the trader body said in a statement.