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7 in 10 Korean retailers feel threat from Chinese e-commerce rush

April 8, 2024 - 18:05 By Shim Woo-hyun
(Herald DB)

Seven out of 10 retailers in Korea say they feel threatened by the rapid expansion of Chinese e-commerce platforms, especially the big three -- AliExpress, Temu and Shein -- an industry-wide survey found Monday.

Of the 500 retailers surveyed by the Korean Chamber of Commerce and Industry, the nation’s largest business lobby, 69.4 percent said their businesses are under threat by the Chinese rush, while 74.4 percent expected heightened competition in the market.

Almost 60 percent of online shopping operators (59.1 percent), in particular, said they have started feeling the direct threat.

But more than half of the respondents (56 percent) said they were not well prepared to compete with the fast-growing Chinese rivals.

“The government’s support policies seem urgent as (local companies) have difficulties in finding countermeasures against Chinese online platforms’ rapid growth here,” said Kim Min-seok, the leader of the retail policy division of the KCCI.

The latest survey comes as the number of customers using Chinese online shopping platforms is on an upward trend recently. According to industry data, the monthly active users of AliExpress, the No. 1 among the top three, are estimated to have exceeded 8.2 million in February, up from 1.7 million a year ago, becoming the nation’s second most popular shopping platform after Korea-based Coupang with 30.1 million memoranda of understanding.

Korea’s 11th Street fell to the third with 7.4 million memoranda of understanding, followed by Temu, another Chinese platform, with 5.8 million memoranda of understanding.

Their growth rally is expected to continue too. Earlier a separate KCCI survey found that almost 52 percent of some 800 customers here responded they were using Chinese e-commerce platforms or will use them in the future.

Meanwhile, the Seoul Metropolitan Government said it would tighten monitoring of goods sold on Chinese online shopping platforms for consumer product safety as concerns over the quality of products on those platforms have emerged.

On Monday, the Seoul government said some children’s items sold on foreign platforms have been found to contain potentially dangerous levels of cancer-causing agents.

The Seoul government said it found some pencil products containing cadmium, lead and other carcinogens at 30 times the legal level here. A leather bag was also found to have carcinogens at over 56 times the legal level.

The city government added it would make a weekly report that summarizes its monitoring of products sold on Chinese platforms, starting in the fourth week of this month, and introduce measures to protect customers from potential issues in the future.

The government's monitoring is expected to focus mainly on the Chinese Big Three.

“Products sold on overseas platforms are not subject to Korea’s safety standards, and this can cause consumer damages at any time,” an official from the Seoul government said. “(The government) will immediately operate a report center and increase monitoring of products (sold on the Chinese e-commerce platforms) to minimize consumer damages.”