The number of South Korean users on Chinese direct purchase platforms, such as AliExpress (Ali) and Temu, rebounded in June after two consecutive months of decline in April and May.
According to WiseApp·Retail·Goods, an app-retail analytics service, Ali saw a 0.8% increase in monthly active users (MAUs), while Temu experienced a 3.3% rise compared to the previous month. The resurgence is attributed to large-scale discount events held last month, which helped attract consumers to the platforms despite earlier controversies over fake products and harmful substances.
Recently, Ali and Temu have been incorporating more Korean wholesalers and are expanding into fresh food sales. “Ali and Temu may just be the beginning,” said Jung Yeon-sung, a professor at Dankook University’s School of Business Administration. “Stronger competition is coming from Chinese wholesale platforms like Ali 1688 and TikTok Shop.”
Jung emphasized that the rise of Chinese direct purchase platforms should not be viewed merely as a retail issue. “Platforms are an ecosystem,” he said, “If Chinese platforms dominate in Korea, all related businesses, including logistics, advertising, and payment services, will shift to China.” Jung particularly noted the severe impact this industry shift could have.
Data security is another significant concern. “Korean consumers enter a lot of personal information, including credit card and purchase information, when using Chinese direct purchase platforms. The issue is that this information is not managed on servers in Korea but goes to China,” Jung said. He stressed the need for a system that allows data control within Korea.
Jung also pointed out that Korean distributors remain competitive due to strong customer service and the high-value Korean consumers place on product quality. “I don’t think we will give up the market to China, but we must always be vigilant and responsive to China’s entry into Korea,” he said.
One of the most contentious issues is the reverse discrimination between Korean retailers and Chinese direct purchase platforms. Korean companies are required to pay customs duties, VAT, and KC safety certification fees when importing Chinese products, whereas Chinese direct purchase platforms like Ali do not. Purchases from these platforms are exempt from customs duties and VAT up to $150 per purchase if made on the same day and the same site, allowing consumers to avoid taxes throughout the year despite direct purchases.
In response, the Korean retail industry calls for “fixing the tilted playing field.” While adjusting the system is important, Jung emphasized that the fundamental solution lies in strengthening the competitiveness of Korean retailers and promoting their globalization.
