By Yoolim Lee and Olivia Poh
(Bloomberg) —Sea Ltd.’s e-commerce unit is leaving Argentina and closing most of its operations in Chile, Colombia and Mexico, retreating from much of Latin America to focus on profitability over growth.
Shopee will close offices in Chile and Colombia and maintain just a small local presence in Mexico to support regional markets, according to a person with knowledge of the matter and an internal email seen by Bloomberg News. Shopee will continue to operate a cross-border e-commerce service in those markets.
The decision should affect a few hundred jobs, said the person, who asked not to be named as the matter was private. Sea however will maintain its presence in Brazil, by far the largest market in the region, though a focus also for rivals like Alibaba Group Holding Ltd.
Shopee Chief Executive Officer Chris Feng cited “elevated macro uncertainty” for the pullout. “This means focusing our resources on our core operations,” he said in an internal email.
Sea, which also runs fast-growing gaming firm Garena, has been scaling back its overseas footprint and peripheral businesses as rising competition curtailed its expansion abroad. Shopee pulled out of France, Spain as well as India months after launching operations in those markets. Reuters first reported Shopee’s downsizing in Latin America.
“Sea’s pullback from Latin America was unsurprising,” said Zennon Kapron, managing director of Singapore-based consulting firm Kapronasia. “We’re clearly in a ‘risk-off’ environment with rising interest rates and increasing uncertainty around the direction of the global economy.”
Sea faces increasing pressure to cut costs after growth in its e-commerce business slowed from pandemic-era highs. Consumers are pulling back on spending online as rising interest rates and prices weigh on the economy.
“In line with our previously stated focus on efficiency and profitability, we will concentrate on a cross-border model for our early stage operations in Shopee Mexico, Colombia and Chile, and close our pilot operations in Argentina,” Shopee said in a statement. “These changes are to ensure that our resources are focused on key business priorities.”
Latin America is Sea’s most important region after Southeast Asia, accounting for almost 19% of its revenue in 2021. Shopee expanded into Mexico, Chile and Colombia just a year ago — two year of going into Brazil — banking on the region’s rising population of young, mobile-savvy users.
Shopee’s second-quarter revenue in Brazil, its core market in Latin America, rose more than 270% from a year earlier. The service also ranked first by average monthly active users in the shopping category in Brazil, Sea said in its quarterly earnings report, citing analysis from data.ai.
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