Alibaba Group announced plans to invest $200 million to establish a logistics center in South Korea. (Image courtesy of Alibaba Group)
SEOUL, Mar. 25 (Korea Bizwire) – Alibaba Group, the Chinese e-commerce behemoth behind platforms like AliExpress, has announced plans to invest $200 million to establish a logistics center in South Korea, setting off alarm bells across the country’s e-commerce and logistics industries.
The move to secure a Korean logistics hub, the first since Alibaba’s entry into the market in 2018, is seen as a strategic play to boost the competitiveness of its AliExpress service through improved delivery capabilities, posing a potential threat to domestic e-commerce giants.
Industry watchers are scrutinizing the timing of AliExpress’s logistics investment, which coincides with the company’s recent acceleration of efforts to expand its presence in the Korean market over the past year.
Some analysts suggest that if AliExpress had prioritized the Korean market from the outset, it should have made sizable logistics investments during its initial years of 2018 and 2019 when the e-commerce sector was experiencing double-digit annual growth and barriers to entry were relatively low before Coupang solidified its dominance.
However, with Coupang and Naver now firmly entrenched as market leaders amidst intense competition from numerous smaller players, questions arise about AliExpress’s ability to generate sufficient returns on a logistics center investment in the increasingly saturated Korean e-commerce landscape.
There is also speculation that AliExpress’s logistics ambitions in South Korea may extend beyond the domestic market, potentially positioning the country as a global transshipment hub aligning with Alibaba’s broader international strategy.
According to industry sources, AliExpress has been utilizing Incheon International Airport as a global distribution point since last year, shipping goods by sea from logistics centers in the Chinese cities of Weihai and Yantai before transferring them to air cargo for destinations across the United States, Europe and beyond.
Data from Incheon Airport shows that the volume of sea-air multimodal shipments handled at the facility surged by 43.1 percent year-over-year in 2023 to a record 98,560 tons, with 99.6 percent of the cargo originating from China, primarily the northeastern regions including Weihai – a major hub for e-commerce products.
The airport’s extensive network spanning 183 cities worldwide, coupled with its proximity to China, has made it an attractive transshipment point for Chinese e-commerce players like AliExpress.
If AliExpress integrates a new Korean logistics hub with its existing Weihai operations, industry insiders estimate that it could potentially enable global deliveries to reach their final destinations within five days – factoring one to two days for sea transport to Korea, and an additional day for air freight worldwide.
There is also speculation that AliExpress may leverage this logistics advantage, combined with its global sales channels, to position itself as an export platform for Korean food and other products.
The company’s recent efforts to attract major Korean food brands to its “K-Venue” section, dedicated to Korean merchandise, have fueled such analyses within the industry.
However, some experts have raised concerns about the potential implications of ceding logistical control to Chinese e-commerce giants like Alibaba, given the massive volumes of direct cross-border shipments involved.
One industry official warned that if Chinese maritime and air cargo carriers were to dominate freight movements, it could undermine South Korea’s competitiveness and ultimately lead to the country’s logistics infrastructure becoming dependent on Chinese operators.
Ashley Song (ashley@koreabizwire.com)
