The Alibaba Group, parent company of the online shopping platform AliExpress, has announced its intention to set up an integrated logistics center in South Korea by the end of this year. (Image courtesy of AliExpress)
SEOUL, Mar. 15 (Korea Bizwire) – The Alibaba Group, parent company of the online shopping platform AliExpress, has announced its intention to set up an integrated logistics center in South Korea by the end of this year, sparking interest in the location and structure of the new facility.
Logistics experts suggest that, given the lengthy process of obtaining permits and construction, it is more likely that Cainiao, Alibaba’s logistics subsidiary, will acquire an existing warehouse instead of building a new facility.
AliExpress revealed in recent business plans that it intends to open its global sales channel in June and enable 10,000 Korean SMEs to export their products worldwide this year.
To provide better overseas logistics solutions, AliExpress plans to complete a 180,000 square meter warehouse, known as the AliExpress Fulfillment Center, in collaboration with a local Korean partner, investing more than 260 billion won.
AliExpress has been exploring the establishment of a logistics center in Korea since last year. Ray Zhang, the representative of AliExpress Korea, mentioned at a press conference in January that the company was considering building a logistics center in Korea to offer services like next-day delivery.
Industry insiders believe that, given the scale of the investment and the size of the planned facility, Cainiao might acquire an existing warehouse, and entrust its operation to a Korean company.
An expert commented, “During the pandemic, there was a surge in online shopping, leading to a rapid increase in demand for logistics centers, especially around the Seoul metropolitan area. Now, with a drop in demand, there are many vacancies, so it’s possible to purchase or lease under favorable conditions.”
Ray Zhang, the representative of AliExpress Korea, mentioned at a press conference in January that the company was considering building a logistics center in Korea to offer services like next-day delivery. (Image courtesy of Yonhap)
Currently, products ordered from AliExpress are imported into Korea by Cainiao using forwarding companies through maritime or air transport, with domestic deliveries handled exclusively by CJ Logistics. The contract between CJ Logistics and AliExpress is reportedly under discussion for extension beyond June.
Although the two companies discussed establishing a domestic logistics center in the latter half of last year, progress has stalled due to internal issues within AliExpress.
If AliExpress establishes a fulfillment center in Korea, it is expected to serve both for selling Chinese products in Korea and for exporting Korean products abroad. However, there is a chance that the new facility could be delayed. Even if an existing warehouse is utilized, starting operations by the end of the year could be challenging due to the time required to set up systems for storage, sorting, picking, packing, and shipping.
Some speculate that the announcement that the facility would be completed by the end of the year might be an overstated move to alleviate regulatory pressure from the Korean government, given that detailed plans for the acquisition of the warehouse and operator selection have not been finalized.
Moreover, there are concerns that the allure of direct purchasing platforms offering extremely low prices might drop if AliExpress imports Chinese products in bulk to Korea. Formal import procedures would require the payment of certification fees, tariffs, and value-added taxes.
Currently, individual consumers purchasing products for personal use are exempt from taxes if the purchase does not exceed $150, allowing direct purchases to be significantly cheaper than those from import sellers.
Ashley Song (ashley@koreabizwire.com)
