Company Cites “Global Market Uncertainties”; Decision comes after India banned Sea’s popular gaming app Free Fire
Company Cites “Global Market Uncertainties”; Decision comes after India banned Sea’s popular gaming app Free Fire
E-commerce and gaming company Sea Ltd. announced on Monday that it was withdrawing from the Indian retail market just months after beginning operations, the second withdrawal this month from an overseas expansion streak as the loss-making company faces weak growth prospects.
The withdrawal, which comes into effect on March 29, comes weeks after its e-commerce arm Shopee announced it would pull out of France and after India banned Sea’s popular gaming app Free Fire.
Following the ban, New York-listed Sea’s market value fell by $16 billion in a single day, prompting some investors to slash their stakes in the Singapore-based company.
Shopee said in a statement that its withdrawal came “in light of global market uncertainties” and that the company will “make the process as smooth as possible.”
Sea said earlier this month that revenue growth for its e-commerce business is expected to halve to about 76% this year, from a staggering 157% in 2021, amid fewer online purchases and engagements as more countries move out of the emerge from the pandemic.
“Due to a drastic shift in market sentiment towards growth stocks, all of these e-commerce companies are under real pressure to at least break even as soon as possible,” said Oshadhi Kumarasiri, equity analyst at LightStream Research, publishing on the Smartkarma platform.
Sea shares had already fallen 11% in January after Chinese tech giant Tencent announced it would sell 14.5 million shares in the group.
Reuters was the first to report the company’s decision to expand its operations in India.
Shopee’s India business began in October 2021 as part of an aggressive international push that led to expansion into Europe. Sea’s market cap at the time was up to $200 billion. It has since fallen to $64.76 billion in March 2022.
The local entity, Shopee India, recruited local vendors and launched a shopping website and app. India’s fast-growing e-commerce market has already been dominated by players like Amazon.com Inc and Walmart’s Flipkart.
One person with direct knowledge of the company’s mindset said Shopee’s decision to leave India was prompted in part by a tighter regulatory scrutiny that saw Seas gaming app Free Fire banned as part of a crackdown on companies that allegedly Send data to servers in China.
Sea said in early March it does not transmit or store data of Indian users in China.
The person said Shopee planned to invest up to $1 billion in India and that the withdrawal would hurt Indian logistics companies with which it had signed lucrative deals.
The company did not immediately respond to requests for comment.
Reuters reported in February, citing sources, that Singapore authorities had raised concerns with India about the ban and asked why Sea had been targeted.
E-commerce players face a strict regulatory environment in India. New Delhi has imposed restrictions for years to protect smaller brick-and-mortar retailers.
Offline retailers in India have often claimed that foreign companies are evading regulations and offering deep discounts that hurt their business, allegations the companies deny. Shopee had been confronted with boycott calls from such retailers in India in recent months.
