The surge of Chinese e-commerce in South Korea is losing steam, with AliExpress, the biggest of the group, posting a 20% year-over-year drop in sales last month, which is its first decline since entering the market in 2023.
Latest data analyses show that Korean consumers are shifting away from low-cost offerings as frustration mounts over poor product quality, safety issues and unreliable customer service.
According to Korea’s alternative data platform Hankyung Aicel, AliExpress’s estimated credit card transaction value in October was 91.7 billion won ($62.8 million), down 19.9% from a year earlier.
It is the first decline in Korean sales for the platform, operated by China’s Alibaba Group, since it established a local subsidiary in Seoul in August 2023 to drive an aggressive low-price strategy.
Its cross-town rivals Temu and Shein have also seen growth stall in the country.
Temu’s payment volume rose 19.4% to 66.9 billion won in October, well below the 145% surge seen in January.
Chinese fashion retailer Shein, which entered Korea in 2024, peaked at 5.3 billion won in sales in July last year, with its monthly sales staying below 5 billion won for three consecutive months since.
POOR QUALITY WEIGHS ON DEMAND
Analysts attributed the tepid demand to Korean consumers’ growing distrust of product and service quality offered by the Chinese e-commerce trio, which is eroding their price advantage.
Complaints over defective or unsafe products have surged.
The state-run Korea Consumer Agency handled 22,816 cross-border transaction complaints last year, up 17.5% from 2023, with those involving China or Hong Kong jumping 123%.
Another government inspection also found that 69 out of 558 imported products failed to meet safety standards.
In July last year, Korea’s privacy watchdog even fined AliExpress 2 billion won for allegedly failing to protect user data, ordering the Chinese platform to strengthen its privacy safeguards.
“The initial buzz around ultra-cheap Chinese goods has faded,” said an executive at a local e-commerce company.
“In many cases, prices aren’t significantly lower than those on domestic platforms like 11Street or Naver Shopping, and shoppers disappointed by quality are walking away.”
LOW RETENTION RATES UNDERMINE GROWTH
User loyalty data also show how fragile the customer base remains in Korea.
Hankyung Aicel data indicate that only 52.6% of AliExpress users in September returned to make another purchase in October, compared with 83.8% for Coupang, Korea’s dominant online retailer.
Temu’s customer retention stood at 50%, while Shein’s was just 18%.
Industry officials said the gap stems not only from concerns over product quality and safety, but also from a lack of differentiation in services such as fast delivery or membership perks.
“Coupang and Naver use subscription perks and overnight delivery to lock in customers,” said an executive at a local e-commerce company. “AliExpress hasn’t built the kind of experience that keeps shoppers loyal.”
COUPANG’S UNCHALLENGED LEADERSHIP
Others noted that amid lingering skepticism toward cheap Chinese goods, fierce competition from local giants continues to limit further expansion.
Coupang, for instance, countered China’s low-price offensive by purchasing 22 trillion won worth of Korean-made products last year, up 5 trillion won from 2023, to support local suppliers.
Still, some in the industry warn against underestimating China’s ambitions, saying that AliExpress’s recent tie-up with retail conglomerate Shinsegae could reignite competition.
In September, Korea’s Fair Trade Commission (FTC) approved the launch of a 50-50 e-commerce joint venture between Shinsegae Inc. and Alibaba Group, a move expected to allow their flagship platforms – Gmarket and AliExpress – to leverage each other’s strengths in marketing and logistics to expand both domestically and abroad.
