[Altesch Shock] The Allure of 'Ultra-Low Prices' That Amazes... Even If It's Made in China, People Buy It If It's Cheap

④ 'Ultra-Low Price' Consumption Triggered by Ali and Temu
Consumers Who Preferred US Direct Purchases Shift to Chinese Direct Purchases
"So What If It's Made in China? It's Cheap"
Overseas Direct Purchase Amount Also Surges

"A belt for 7,900 won? Glasses for 3,000 won? They must be crazy... the shipping fee will cost more!" At the end of last month, famous streamer Chimchakman (webtoon artist Lee Mal-nyeon, real name Lee Byung-geon) browsed products on the AliExpress and Temu applications (apps) during an online broadcast, expressing amazement at the low prices, something he had never experienced before. Viewers watching his broadcast shared their experiences of purchasing items from AliExpress and Temu through real-time chat.

'Lured consumers with ultra-low prices... China became the largest direct purchase source'

The biggest reason consumers use C-commerce (Chinese e-commerce) platforms like AliExpress and Temu is undoubtedly the low prices. The same products can be purchased at several times cheaper prices than on domestic open markets. China is known as the "world's factory" due to its dense manufacturing facilities, and low labor costs help reduce production expenses.

Jung Ji-soo (pseudonym), a 20-something office worker, recently got hooked on shopping on Temu thanks to its "first purchase discount." Jung, who mainly buys interior accessories, said, "Products that cost over 5,000 won in domestic stores are sold for just about 1,000 won on Temu. I was worried about poor quality, but so far, I don't think the quality is inferior. There's not much difference compared to products sold in domestic stores or e-commerce."

According to Statistics Korea, last year, Korean consumers' direct overseas online purchases from China amounted to 3.2873 trillion won, a sharp increase of 121.2% from the previous year. This accounts for about half of the total direct purchase volume. Last year, China's overseas direct purchase amount surpassed the United States for the first time ever, which had held the top spot until then. The U.S.-origin online overseas direct purchase amount was recorded at 1.8574 trillion won, down 7.3% from the previous year.

As C-commerce direct purchases surged, the total overseas direct purchase amount also increased. Last year, domestic online overseas direct purchase spending reached 6.7567 trillion won, growing 26.9% from the previous year. This was the first time since Statistics Korea began compiling related statistics in 2014 that the amount exceeded 6 trillion won. The growth was driven by China's aggressive low-price product strategy. The product categories with increased direct purchase amounts include clothing and fashion-related items (43.5%), daily necessities and automotive products (35.9%), and sports and leisure goods (65.5%)?all categories that domestic consumers mainly purchase from C-commerce platforms.

Payments made through Chinese direct purchase apps are also rapidly increasing domestically. According to WiseApp, Retail, and Goods, app and retail analysis services, AliExpress's estimated payment amount in the first quarter of this year was 819.6 billion won, up about 164% from 310.1 billion won in the first quarter of last year. During the same period, Temu's estimated payment amount was 91.1 billion won, with 46.3 billion won recorded just last month, more than doubling in two months. Compared to August last year (1 billion won), shortly after its domestic launch, the transaction amount has increased more than 40 times.

However, Korean consumers mainly purchase low-priced products on C-commerce platforms. When dividing the payment amounts of AliExpress and Temu by their monthly active users (MAU) during this period to calculate per capita payment amounts, AliExpress and Temu were estimated at 33,622 won and 4,451 won, respectively. The estimated per capita payment amount for major domestic e-commerce platforms is known to reach about 100,000 won, so these figures are less than half. WiseApp's payment estimates use statistical estimation methods targeting Koreans aged 20 and over, based on consumer payment data displayed on credit cards, debit cards, bank transfers, mobile payments, and micropayments.

The relatively low per capita payment amount on C-commerce is interpreted as a result of the platforms mainly selling low-priced products. Since the price per item sold on C-commerce platforms is low, the per capita purchase amount also appears small. However, AliExpress showed a higher amount than Temu, likely due to the influence of the domestic product-exclusive sales channel "K-Venue," which started operating last year. K-Venue is a dedicated channel where domestic companies list products and ship them domestically, similar to open markets of e-commerce platforms. K-Venue sells food items such as agricultural and livestock products and ready meals, which were rarely seen on AliExpress before, as well as electronic devices from domestic companies like Samsung Electronics.

Experts predict that C-commerce will gradually increase its share in the domestic distribution market. Professor Seo Yong-gu of the Department of Business Administration at Sookmyung Women's University said, "C-commerce companies seem to be creating an ultra-low-price e-commerce market that did not exist domestically. Although the average transaction amount is low and the impact is still minimal, I believe this market could ultimately grow to about 60 trillion won." Considering that the domestic consumer market is about 600 trillion won, this means C-commerce would account for 10% of the market.

'Delayed deliveries like "Hamheung Chasa" and harmful substances... C-commerce promises "shorter delivery times and new service centers"'

As the number of users increases, consumer complaints are also rising, which C-commerce must address. According to the Korea Consumer Agency, the number of international transaction consumer consultations received last year was 19,418, up 16.9% from 16,608 the previous year. Among these, consultations related to direct product transactions surged 136.1%, the largest increase. The Consumer Agency attributes this rise to increased consultations related to AliExpress and other C-commerce platforms.

Consumers' inconveniences with C-commerce mainly involved refund and delivery issues. Among complaints received by the Consumer Agency, delays or refusals of cancellations and refunds accounted for 7,521 cases (38.7%), the highest number. Complaints related to non-delivery, delayed delivery, and wrong delivery followed with 2,647 cases (13.6%). Most products sold on C-commerce platforms are shipped from China, requiring logistics such as maritime transport, resulting in relatively long delivery times.

A survey also showed that customer satisfaction with C-commerce shopping is declining. The Korea Chamber of Commerce and Industry recently surveyed 800 consumers who had used the "AliExpress, Temu, Shein" apps within the past year. The results showed that 80.9% of users experienced dissatisfaction or damage while using C-commerce. Delivery delays (59.5%) were cited as the biggest problem, followed by low quality (49.6%), defective products (36.6%), exaggerated advertising (33.5%), and delayed after-sales service (28.8%).

There have also been cases where carcinogenic substances exceeding standards were detected. The Incheon Regional Customs Office announced earlier this month that, after analyzing the components of 404 accessories sold on AliExpress and Temu, 96 products (24%) contained carcinogens exceeding the permissible limits. According to Incheon Customs' analysis, these products contained cadmium and lead at levels ranging from at least 10 times to as much as 700 times the domestic safety standards. In a survey conducted by Seoul City last month, harmful substances exceeding allowable limits were detected in 8 out of 31 closely used daily products sold on AliExpress, including children's products.

C-commerce platforms have acknowledged these issues and are working to resolve them. Both AliExpress and Temu are deleting problematic products and conducting investigations. AliExpress currently implements policies such as unconditional returns and refunds within 90 days, guaranteed delivery periods, and counterfeit compensation systems. Professor Seo said, "Due to the limitation that products are manufactured in China while platforms operate worldwide, issues like defective or counterfeit products are inevitable. However, since the products are very low-priced, the impact on consumers is not significant. For growth, strengthening product inspections to gain consumer trust will be important."

Series Order

① Korea swallowed by ultra-low price strategy... Fathers face job loss crisis
② AliExpress's 'zero commission' policy saves entrepreneurs
③ "Embrace China" AliExpress attracts talent... What about job creation effects?
④ Even if it's Chinese-made, if it's cheap, people buy it... Consumer trends have changed
⑤ Busy preparing countermeasures only after losing the home market to China