The Korea Fair Trade Commission (KFTC) intends to initiate an investigation into Temu and Shein, following its inquiry into AliExpress, the leading online shopping platform in China, regarding potential consumer harm.
This comes as the indiscriminate onslaught of Chinese online shopping malls, leveraging ultra-low-priced products, has been increasingly causing damage in the domestic market. The KFTC has already warned Alibaba that it could proceed with an investigation into the matter if consumer harm persists.
Last week, the KFTC conducted an on-site investigation into Ali Korea, which can be considered to be the Korean branch of AliExpress. Additionally, the commission plans to conduct a written inquiry into Temu and Shein.
The investigation will focus on whether there have been violations of the Electronic Commerce Act and the Fair Labeling and Advertising Act. Specifically, it aims to determine whether online shopping malls have properly fulfilled their legal obligations regarding the disclosure of information about their vendors and their responsiveness to consumer complaints.
However, it is anticipated that there may be limitations to the domestic investigation into Temu and Shein as they do not have corporate entities in Korea. In response to this, a KFTC official stated that there would be no issue in determining legal violations as the focus lies on the screens exposed to consumers and the extent of damages incurred.
The KFTC directly conveyed concerns regarding consumer complaints to AliExpress at the end of last year. It urged measures to address the surge in complaints related to counterfeit products, deliveries, and refunds. Despite these efforts, it appears that consumer harm has not decreased, prompting the recent large-scale investigation.
Meanwhile, the Personal Information Protection Commission is also investigating whether Chinese shopping malls such as AliExpress, Temu, and Shein comply with domestic laws regarding the handling of personal information. Concerns about the possibility of personal information leakage to China are growing, leading countries like the United States, Canada, and the United Kingdom to take measures such as banning the use of TikTok by government officials in response.
The scale of cross-border shopping from China continues to increase, with China accounting for 48.7 percent of the total overseas direct purchases last year. Consequently, the trade deficit in the online shopping sector with China has reached an all-time high.
The KFTC has also initiated sanction proceedings against Meta, the operator of Instagram, on allegations of neglecting consumer harm. The main focus of the investigation is on whether Meta, as an intermediary, has fulfilled its obligations, such as providing seller information in SNS markets.