A sign advertising AliExpress in a subway station (Image courtesy of Yonhap)
SEOUL, Apr. 5 (Korea Bizwire) – South Korean consumers have been rapidly embracing Chinese e-commerce platforms like Alibaba’s AliExpress and Pinduoduo’s Temu, lured by steep discounts and aggressive promotional campaigns.
However, this surge in popularity has not come without concerns over product quality, delivery delays, and regulatory compliance.
AliExpress, a subsidiary of the Chinese tech giant Alibaba, made a big marketing push in South Korea last year, featuring popular actor Ma Dong-seok in advertisements and establishing a Korean subsidiary in August.
Product placement for Temu in a local reality show (Photo: a screenshot from a television show)
The platform waived commission fees for Korean sellers on a dedicated “K-venue” channel starting in October, while offering deep discounts and cash-back promotions to attract customers.
These tactics paid off, with AliExpress’s Korean user base quadrupling to an estimated 8.87 million in just two years, according to data from the app analytics firm Wiseapp.
Not to be outdone, Temu, the e-commerce arm of China’s PDD Holdings, has seen even more explosive growth since its Korean launch in July 2023.
By leveraging cash coupons, gamified promotions, and multi-level referral schemes, Temu’s Korean user count skyrocketed from 510,000 last August to 8.29 million in March, nearly catching up to AliExpress.
A new campaign for Temu’s spring promotions based on product placement has helped to sustain the surge.
“AliExpress entered the Korean market in a big way starting last spring, becoming a household name in just a year,” said an e-commerce industry official. “Temu is likely to penetrate even faster by learning from Alibaba’s trial and error.”
A roulette game in Temu for earning free credits and gifts (Photo: a screenshot from Temu)
Both platforms are now doubling down on their Korean operations. AliExpress plans to relocate its Korean office to the upscale Parnas Tower in Gangnam District to accommodate a growing local workforce of around 100 employees across various roles.
Temu established a Korean subsidiary, Whaleco Korea LLC, in February, signaling its intent to build a more permanent local presence.
The rapid ascent of these Chinese e-commerce giants has raised concerns within South Korea’s domestic retail industry and government agencies.
With vast capital reserves — Alibaba’s market capitalization is around 250 trillion won, while PDD Holdings is valued at 212 trillion won, dwarfing Korea’s Coupang at 45.5 trillion won — local players worry about being outspent and outmaneuvered.
Consumers, too, have voiced complaints about subpar product quality and delayed deliveries, despite the allure of rock-bottom prices.
Ko Hak-soo, the chairperson of the Personal Information Protection Commission, speaks during a meeting with reporters in Washington on April 3, 2024. (Image courtesy of Yonhap)
“While C-commerce [Chinese e-commerce] platforms are attracting consumer attention with cash coupons and ultra-low prices, it will be difficult for them to be profitable in Korea without ensuring quality,” cautioned a retail industry official.
Regulatory scrutiny is also intensifying. South Korea’s Personal Information Protection Commission is investigating how user data is collected and used by Chinese e-commerce firms like AliExpress and Temu.
The commission’s chairman, Go Hak-soo, cited concerns over China’s data privacy laws and enforcement during a recent meeting with foreign correspondents in Washington.
Meanwhile, the Fair Trade Commission has examined AliExpress’s Korean unit for handling consumer disputes, while the National Agricultural Products Quality Management Service has pressed the platform on country of origin labeling for food products.
Ashley Song (ashley@koreabizwire.com)
