"Assault of Chinese Distribution Giants, Korean Companies Expected to Face Major Shock"

"South Korean Companies Also Need to Develop Business Models"

Global online marketplace AliExpress held a press conference on the 6th at Lotte Hotel Seoul to announce the "Strengthening of Intellectual Property Rights and Consumer Protection." Ray Jang, CEO of AliExpress Korea, is discussing measures to prevent consumer rights violations such as counterfeit and poor-quality sellers. Photo by Younghan Heo younghan@

As Chinese online shopping malls such as AliExpress and Temu aggressively enter the Korean market, warnings have emerged that it will not be easy for Korean companies to respond.

Lee Cheol, a Chinese political and economic expert and author of "Choice of China," said on CBS's "Kim Hyun-jung's News Show" on the 14th, "AliExpress and Temu have about 8 million and 6 million users in Korea respectively, ranking 2nd and 4th among domestic shopping malls," adding, "The growth of Chinese shopping malls will naturally have a significant impact on Korean shopping mall companies and the Korean companies supplying goods through those malls."

He pointed out the problem, saying, "Looking at the regulations of the online shopping mall market so far, shopping mall companies have not taken much responsibility, and once a transaction is made, it is often resolved between the supplier and the consumer." This loophole allowed the expansion of Chinese shopping malls' entry. Lee said, "Ultimately, unless we can produce competitive products, it will never be easy to respond to the challenge from these Chinese companies."

Even for the same products, it is much cheaper to purchase from AliExpress or Temu than from Korean online shopping malls, and shipping is free. Regarding Temu, which sells products with free shipping even at a loss, Lee explained, "The pricing authority is determined by Temu (not the companies listed on the platform)," adding, "It is a strategy to increase market share, but wouldn't the positions of Temu or Ali and the companies listed on the shopping malls differ?"

With the rapid growth of AliExpress and Temu, Korean companies need to be alert and develop new business models. Lee emphasized, "(Korea) seems to view the entry of Chinese companies somewhat complacently," adding, "AliExpress and Temu are companies that have won out among hundreds of competitors in the Chinese market. Their business models are also specialized differently from Korea’s. We must develop business models that are no less competitive."

Meanwhile, Alibaba is reportedly preparing an investment plan exceeding 1 trillion won to expand its business in Korea. It is said that Alibaba plans to invest $1.1 billion (about 1.4471 trillion won) over the next three years to expand its business in Korea. By investing $200 million, it will build an integrated logistics center of 180,000 square meters (about 54,450 pyeong) in Korea this year, and also allocate funds to establish a customer service center with professional consultants and to block counterfeit goods.