[Reporter’s Notebook] The Invasion of AliExpress and Temu Is Nothing to Fear

Chinese Direct Purchase Apps' Ultra-Low Price Offensive
Domestic Distribution Industry Faces 'Catfish' Competition
Monitoring Consumer Protection and Fairness Values

Chinese e-commerce platforms (C-commerce) AliExpress and Temu are intensifying their full-scale entry into the domestic market with the weapon of 'ultra-low prices,' causing the distribution industry to be on high alert. In addition to low prices, they are expanding domestic marketing, and the estimated monthly app users of Ali and Temu have already surpassed those of native e-commerce platforms 11st and Gmarket. Given this situation, discussions about regulating C-commerce platforms naturally arise. The Fair Trade Commission has launched an investigation into whether C-commerce companies are fulfilling their consumer protection obligations, and the Ministry of Trade, Industry and Energy has even formed a dedicated team.

The emergence of C-commerce is welcome news for consumers. This is because they can obtain the same products at much lower prices than when domestic distributors import them. The discount events that C-commerce holds in the domestic distribution industry with huge costs ultimately benefit consumers. Domestic vendors can also find C-commerce to be an attractive platform. Ali has decided not to charge entry or sales commissions to vendors joining 'K-Venue,' Ali's exclusive sales channel for domestic vendors, until June. This means that the profits from products sold on Ali fully belong to the sellers.

In fact, after the emergence of C-commerce, competition in the domestic distribution industry has heated up. Two weeks after news broke that Ali would invest as much as 1.5 trillion KRW in the domestic market, Coupang announced it would invest 3 trillion KRW?twice that amount?to enable nationwide Rocket Delivery. Other e-commerce platforms and large supermarkets are also strengthening membership benefits and holding discount events one after another to 'defeat C-commerce.' C-commerce has played the role of a 'catfish' that revitalizes competition in the stagnant domestic distribution market.

However, while competing, the catfish should not muddy the waters. The framework of laws enacted for consumer protection and the value of fairness must be upheld. A representative case is the discovery of carcinogens exceeding standards in accessories sold on Ali and Temu, and complaints filed with the Korea Consumer Agency due to improper exchanges and refunds. If such problems remain unresolved and their influence in Korea grows, consumers will suffer damages.

C-commerce companies have stated that they will immediately suspend sales of problematic products and strengthen investments for domestic consumer protection to improve these issues. It is the government's role to induce competition with their commerce platforms while ensuring fair competition. While fostering competition to benefit consumers, if the market is disrupted by breaking the rules, decisive action must be taken.