테무 쇼핑Recently, Chinese shopping apps are expanding their influence in Korea. According to app analysis service WiseApp, the estimated monthly number of users of Ali Express, China’s Alaviva Group’s overseas direct purchase platform, in July was 4.67 million, an increase of 82.6% compared to the same period last year. This ranks 4th after Coupang, 11th Street, and G Market. Looking at the growth rate alone, it is growing faster than any other domestic shopping platform.
Quiet but ‘strong’ growth
Ali is not the only Chinese shopping platform that is popular in Korea. There is also a shopping app called ‘Temu’ from Chinese e-commerce company Pinduoduo. Last July, Temu ranked first in downloads in the domestic Google Play Store shopping category, offering discounts of up to 90%. The fashion shopping app ‘Sheein’, called ‘Chinese version of Uniqlo’, is currently quietly expanding its domestic influence in Korea.
The factor that makes Chinese shopping apps popular is their price. Alibaba is China’s largest e-commerce company, occupying 80% of the Chinese e-commerce market. Ultra-low-price products such as ‘walking shoes 4,000 won’, ‘golf gloves 7,000 won’, and ‘slippers 100 won’ are listed. The same goes for Temu. Under the slogan ‘Shop like a billionaire’, the company is implementing a ‘buy more sell less’ sales strategy by reducing the sourcing steps for products in categories such as household goods, clothing, and electronics.
Shein is a representative of ‘ultra fast fashion’. Fast fashion refers to clothes that are made quickly and worn quickly according to constantly changing trends. It is characterized by a very low price by prioritizing design over material. Shein designs and sells clothing directly through analysis of SNS big data. For this reason, more than 1,000 new ‘low-priced’ products are updated on the website every day.
Many analyzes say that the heyday of Chinese shopping apps coincided with Korea’s economic downturn. Korea is suffering from the so-called ‘three hardships’ of high inflation, high interest rates, and high exchange rates. Earlier, Mr. Han said, “From cell phone cases to earphones, there are many products that I have already purchased from Chinese shopping malls. If I don’t need the products urgently, I usually order them from Chinese shopping malls such as Ali and wait for them.”
China is already the trend for overseas flights
In fact, Chinese overseas direct purchase transactions are on the rise every day. According to the ‘2023 Online Shopping Trends’ announced by Statistics Korea, online overseas direct purchases in the second quarter of this year increased by 25.6% (KRW 1.635 trillion) compared to the same period last year. Of these, nearly half, 48% (KRW 777.8 billion), is from China. This is due to the increased domestic influence of Chinese shopping platforms such as AliExpress.
They are also in full swing targeting the Korean market. Korea’s biggest strength is that it is close to China and has excellent price competitiveness even though shipping costs apply. AliExpress has already announced that it will invest 100 billion won in the Korean market in March of this year. Recently, there is a rush to expand logistics infrastructure at home and abroad to strengthen delivery competitiveness. Temu also officially announced its intention to enter Korea last July. The industry predicts that Sheein will also enter the Korean market, where demand for fashion is high.
Chinese shopping platforms are already dominating the market overseas. Temu also became the most downloaded shopping app in the United States last March, surpassing Amazon and Walmart. Shein is attracting teenage consumers in the U.S. by offering $5 skirts and $9 jeans. Alibaba is also accelerating its expansion into overseas markets as the domestic economy in China becomes difficult.
The era of ‘transnational borders’ is coming
This means that the influence of Chinese shopping platforms can grow even more in Korea. The expectation is that with the advent of the ‘transnational’ era, the speed of delivery between countries will become noticeably faster. In fact, AliExpress has recently been focusing on increasing delivery speed by strengthening collaboration with CJ Logistics. Some are concerned that in the long term, the consumption of major daily necessities may shift to China.
For this reason, domestic companies are also responding by increasing their competitiveness in ‘overseas direct purchase’. Coupang is giving strength to Rocket Direct Purchase, which has strengths in fast delivery and easy customs clearance procedures. 11th Street is also working with Amazon in the U.S. to increase the range of overseas direct purchase products. Q10, an overseas direct purchase online platform, also opened a 10,000 pyeong logistics center in Icheon, Gyeonggi-do this month through its logistics subsidiary Q Express.
Of course, Chinese shopping platforms still have clear limitations. The biggest problem is delivery. It is common for delivery to take more than a month. In particular, the speed of customs clearance is slowing down due to the recent increase in overseas direct purchases. Defects and counterfeit products are also considered a major problem. In fact, according to the results of a recent survey conducted by the Korea Consumer Agency on 1,000 consumers about their experience of being victimized by overseas direct purchases, AliExpress had the most victims. Growing anti-China sentiment is also considered a potential variable.
An official in the commerce industry said, “Recently, Chinese shopping platforms are quietly expanding their influence in Korea by boasting of price competitiveness,” and added, “The transaction amount is increasing due to high inflation and high exchange rates.” However, he predicted that “expansion will not be easy as domestic companies’ direct purchasing capabilities have increased and there is considerable consumer distrust toward Chinese shopping malls.”
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