According to a report released by the Korea Economic Research Institute (KERI) on June 17, China's “big three” e-commerce platforms — JD.com, Alibaba, and Pinduoduo, the parent company of Temu — recorded an average annual revenue growth rate of 41.0% over the past five years. This rapid growth has enabled Chinese companies to occupy three of the top five global e-commerce revenues. The top five e-commerce companies by revenue are Amazon (USA), followed by JD.com (China), Alibaba (China), Pinduoduo (China), and Coupang (South Korea).
The Korea Economic Research Institute's analysis emphasized that Chinese platforms have been rapidly penetrating the Korean market since the beginning of last year. The institute recommended, “As Chinese platforms are rapidly taking control of the domestic market, it is urgent to prepare measures such as improving regulation-centered distribution policies, strengthening consumer protection, and providing support to small and medium-sized domestic distribution and manufacturing companies.”
AliExpress entered the Korean market in 2018, marking the start of a major shift in the e-commerce industry. At the time, the global e-commerce market was valued at $2.9 trillion. Fast forward to last year, and the market has nearly doubled to $5.8 trillion, reflecting the rapid growth and influence of online shopping around the world.
In January last year, the top e-commerce platforms in Korea based on monthly users were Coupang at the top, followed by 11st, Gmarket, Temu, and AliExpress securing the fifth place. However, the launch of Temu in Korea in July last year dramatically changed the competitive dynamics. In less than a year, Temu has risen to fourth place, pushing Gmarket to fifth place as of May this year. The current ranking is Coupang at number one, followed by AliExpress, 11st, Temu, and Gmarket.
South Korea's e-commerce market hit a record high of 228.9 trillion won last year, making it the fifth largest in the world after China, the US, the UK and Japan. This growth was driven by a large increase in purchases through Chinese platforms, which increased 121.2% year-on-year to 3.3 trillion won, far surpassing the 1.9 trillion won through US platforms. As a result, purchases exceeded sales in South Korea's overseas e-commerce, resulting in a deficit of 5.1 trillion won last year.
As the e-commerce environment continues to evolve, there is an increasing need for regulatory adjustments and supportive measures for domestic businesses. The rapid growth of Chinese platforms brings both opportunities and challenges to the Korean market, requiring a balanced approach to ensure sustainable development and consumer protection.
