Cheap e-commerce is economic suicide

A grey plastic mailer sits on a doorstep in Petaling Jaya. Inside is a phone case. Total cost: RM2, with free shipping.

That is less than the price of a black coffee at the corner kopitiam. The buyer picks up the parcel, snaps the flexible polymer case onto their phone and feels like a financial genius.

They shouldn’t. That tiny package is the endpoint of a high-speed logistics operation driven straight into the heart of the domestic economy. It came from a factory floor in Guangdong, China, bypassed three tiers of local distributors, cleared customs without paying a cent in traditional tariffs and landed on a Malaysian doorstep without generating a single cent in local business margin.

This is the consumer-to-manufacturer model perfected by Pinduoduo and its international export arm, Temu. It aggregates millions of buyers, forces Chinese factories into brutal bidding wars over pennies and dumps a flood of ultra-cheap inventory directly into foreign living rooms. It feels like a miracle of modern commerce. It operates more like an industrial strip mine.

The argument for letting this run wild is easy to understand. Nobody in their right mind turns down a bargain. Life in Malaysia has become brutally expensive. Food prices refuse to drop, rent eats up half a paycheck and wages crawl along at a snail’s pace.

When a working mother can buy a backpack, three shirts and a set of kitchen utensils for RM40 instead of RM150 at a local shop, she is not being reckless. She is balancing a household budget that offers no margin for error.

To tell her she should pay triple to support a local merchant sounds, on the surface, like out-of-touch elitism. That is the trap. The consumer-first argument relies entirely on looking at the price tag while ignoring the paycheck.

Given the choice between a fleeting consumer discount and the survival of our local traders, I choose the traders – every single time.

Local merchants, wholesalers and small-town stockists are not parasitic middlemen taking a cut for doing nothing. They pay rent to local landlords. They hire local drivers to move crates from ports to warehouses. They pay domestic utility bills, obtain business licences and keep local banks solvent. When a mobile application connects a buyer directly to a factory floor 3,000 kilometres away, every one of those domestic transactions can vanish.

Thirty years ago, during the Asian financial crisis, our economies survived in part because the physical infrastructure of trade remained local. The shops were here. The warehouses were here. The inventory had value, and the supply chains employed real people who spent their wages down the street.

Today, that web is being dismantled by algorithms designed to reward maximum volume and minimum cost. On platforms such as Temu, merchants’ margins are squeezed to near zero. If a buyer complains about a scratch on a five-ringgit trinket, the app’s algorithm may issue a “refund-only” order – returning the buyer’s money while leaving the seller to absorb the loss.

In Guangzhou, hundreds of factory owners reportedly stormed Temu’s headquarters to protest frozen accounts and arbitrary fines that wiped out entire years of revenue. If the platform treats its own suppliers like disposable fuel, imagine what it will do to a Malaysian small-business owner trying to pay a local electricity bill.

Other nations have stopped pretending this is simply harmless free-market competition.

Jakarta saw the writing on the wall early. The Indonesian government looked at Temu’s direct-to-consumer pipeline, calculated the potential damage to its textile makers and small market vendors, and slammed the door shut. It banned the platform outright. That was not backward protectionism; it was emergency economic defence.

In Europe, trade officials spent two decades watching domestic shoe, bicycle and textile manufacturing come under pressure from waves of under-declared imports. The European Union moved to scrap its €150 Customs-duty exemption for low-value parcels and introduce measures to level the playing field. They recognised that free trade without effective border controls can leave domestic industries at a disadvantage.

Malaysia’s current response, a modest 10 per cent tax on low-value goods, is like trying to stop a mudslide with a plastic umbrella. It does not address the fundamental imbalance of an offshore platform shipping goods directly to consumers while potentially bypassing domestic regulatory requirements.

If we continue to treat direct-to-consumer dumping as a harmless luxury for budget-conscious shoppers, the consequences could be severe. If this continues, Malaysia risks ceasing to be a producing economy. We will become a nation of pure importers, standing helplessly at the end of someone else’s conveyor belt.

When you kill the local merchant, you do not secure cheap goods forever. You simply trade away your ability to produce anything at all, leaving a nation of consumers with empty pockets and nowhere left to work.

Lai Chen Heng is a political activist and a former Kuala Lumpur City Hall advisory board member.

The views expressed here are the personal opinion of the writer and do not represent those of Twentytwo13.