Chinese e-commerce growth stalls in South Korea

Chinese e-commerce players’ rapid expansion into the South Korean online retail market is losing steam as their bang-for-the-buck products have met growing complaints about quality and after-sales services among local consumers.

According to the Korean alternative data platform KED Aicel, AliExpress generated 113.2 billion won ($82.8 million) in estimated card transaction value in Korea in May, up 2.7% from the same month of last year but down 3.4% from the prior month.

Following the official launch in Korea in 2023, the e-commerce arm of China’s Alibaba Group immediately posted rapid sales gains. But since late last year, its monthly sales have plateaued at around 100 to 120 billion won.

Its crosstown rival Temu reported 68.1 billion won in card transaction value last month, up 35.1% from a year ago but a mere 1.8% from the prior month.

The two Chinese e-commerce players’ monthly sales growth has cooled from 2024, when their combined transaction value reached 4.29 trillion won, an 85% jump from the prior year, according to data from Korea-based mobile app analytics firm Wiseapp.Retail.Goods.

LOW PRICES, HIGH FRUSTRATION  

Chinese marketplaces initially attracted Korean consumers by offering cheaper alternatives to domestic products. For example, charger cables priced at 6,000 to 7,000 won on Coupang, Korea's answer to Amazon.com, could be purchased for 2,000 won on AliExpress.

However, persistent complaints over quality and inadequate after-sales service — particularly slow return and refund processes — have dented consumer confidence in products shipped from China.

AliExpress and Temu have invested heavily to accelerate deliveries to lure Korean consumers but continue to lag behind local rivals such as Naver and Coupang, which offer faster shipping options.

Data privacy concerns have also fueled skepticism. A data leak incident involving AliExpress last year prompted more Koreans to abandon the platform.

Chinese online retailers have recently hit a wall in Korea, said an official from the local retail industry, adding that the online retailers may need more aggressive investments to regain ground.

In response, AliExpress has recently recruited additional brand ambassadors to boost visibility.

The platform previously gained traction through aggressive marketing campaigns featuring popular Korean actor Ma Dong-seok, who recently renewed his partnership as brand ambassador.   

Write to Yun-Sang Ko at kys@hankyung.com

Sookyung Seo edited this article.