Executives and experts from domestic e-commerce companies such as Coupang are collaborating to develop strategies in response to the aggressive expansion efforts of Chinese e-commerce platforms including AliExpress and Temu.
According to industry sources on Feb. 14, the Ministry of Trade, Industry and Energy, led by the Deputy Minister for Medium-sized Enterprise Policy, held a meeting at the Korea Chamber of Commerce and Industry building with officials from Global Standards No. 1 (GS1), as well as representatives from domestic online retail businesses such as 11Street, Gmarket, and SSG.com. The atmosphere in the domestic e-commerce industry has drastically changed in the past two months. During the meeting, domestic industry representatives reportedly expressed concerns, stating, “If Chinese e-commerce, which is encroaching on the domestic market at a rapid pace, is left unchecked, it could lead to the collapse of the domestic retail industry and adversely affect the livelihoods of small business owners.”
Professor Jung Yeon-sung from Dankook University, who led the presentation at the meeting, pointed out two concerns. First, he emphasized the threat posed by the aggressive expansion of Chinese e-commerce platforms leveraging ultra-low prices, potentially leading to the collapse of domestic manufacturers. Secondly, he highlighted the increasing number of consumer complaints and refund requests from consumers who purchased products through Chinese e-commerce platforms, noting a lack of sufficient mechanisms to protect consumers.
During the meeting, discussions centered on the disparity between domestic and foreign platforms, particularly concerning product certifications. It was highlighted that small domestic businesses selling goods imported from China are burdened with tariffs, value-added taxes, and the requirement for KC certification. In contrast, Chinese platforms such as AliExpress and Temu can sell goods without the need for special certifications. This discrepancy was likened to a “tilted playing field,” enabling Chinese platforms to offer products at lower prices.
The industry appealed to the government to devise countermeasures. It called for the establishment of legal grounds to prevent consumer harm when overseas platforms operate targeting domestic consumers, and the need for measures to resolve the differential treatment between domestic and overseas operators, including tariffs and value-added taxes. Additionally, there was discussion about the necessity of policy support to enhance the competitiveness of domestic small and medium-sized manufacturers, individual sellers, and domestic platforms for selling products to international customers.
Meanwhile, the total amount spent on online overseas direct purchases last year reached 6.76 trillion won (US$5.06 billion), marking a 26.9 percent increase compared to the previous year, according to data from Statistics Korea. However, upon closer examination, it is revealed that the amount spent on direct purchases from China accounts for nearly half, totaling 3.29 trillion won.
The problem arises as transactions on Chinese direct purchasing platforms become more active, leading to an increase in consumers falling victim to counterfeit products. Platforms like AliExpress are selling counterfeit goods that imitate the design and functionalities of brands both domestic and international, such as Samsung Electronics and Nike, without facing any sanctions. Furthermore, there is a lack of proper customer service centers for Korean consumers to address complaints regarding product conditions, delivery, and other related issues.
According to data released by the Korea Consumer Agency last year, among 500 consumers who purchased overseas goods within the past year, AliExpress was reported by 31 individuals as the platform with the highest number of incidents while having the lowest resolution rate at 61.3 percent.
With the further activation of Chinese direct purchasing platforms, the impact on domestic e-commerce companies is inevitable. This is because the easy accessibility of low-cost Chinese products may undermine the foundation of domestic manufacturers and wholesalers who produce and supply the same items in South Korea.
The Korea Federation of Micro Enterprise recently stated, “Chinese platforms like AliExpress and Temu are threatening the livelihoods of domestic small business owners by employing a strategy of ‘aggressive low-cost tactics.’ Chinese platforms should be subject to regulation but the government’s efforts in this regard are inadequate.”
The same day there was also an argument that enhancing the competitiveness of reverse purchasing is necessary to address trade imbalances. Last year, the online overseas direct sales amounted to 1.66 trillion won (US$1.25 billion), marking a 10.1 percent decrease compared to the previous year, according to data from Statistics Korea.