The Koreas

The Rise of Chinese E-Commerce in South Korea

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The Koreas

The Rise of Chinese E-Commerce in South Korea

Chinese online marketplaces are a growing phenomenon throughout South Korea.

Just six months after launching, “Taobao Mania,” an online community helping Koreans shop on Chinese online marketplaces, is thriving.

Taobao Mania not only translates for its members but also offers legal advice, which customers might need when they purchase goods from Chinese online marketplaces.

“There are many Korean customers who are not able to shop on Chinese websites because of the language barrier,” said a manager of Taobao Mania. “Our role is to make shopping easier by acting as a messenger between Korean customers and the Chinese websites.”

Taobao Mania is not the only website helping Korean consumers take advantage of China’s growing e-commerce. In fact, similar online communities have popped up all over Korea’s internet portals, reflecting the growing number of Korean consumers who wish to purchase goods from Chinese online marketplaces like Taobao, Tmall, and Alibaba.

According to the Korea Customs Service, on some days in recent months China has been the second most popular foreign country from which Korean consumers purchase goods online.

On May 20, for example, 11 percent of these shoppers purchased their goods from Chinese online marketplaces, while 74 percent used American ones.

As this suggests, the American e-commerce platforms still dominate the Korean market. Still, their Chinese counterparts are making rapid inroads.

“The number of people who purchased goods from China in the first quarter of this year increased by 170 percent from the same period of last year,” said Yoo Seoung-ho, an official at Malltail, a delivery agency for foreign goods.

Yoo explained that South Koreans’ perceptions of Chinese online retailers have changed significantly in recent years.

“Koreans now think they can buy [the] same stuff at a cheaper price from Chinese online shopping outlets,” he said.

It is possible for the Korean consumers to pay 20 or 30 percent less for goods from Chinese online marketplaces than they would pay buying the same items in Korea.

A 27-year-old office worker, Kim Min-ji, who used to buy products from the U.S., said she recently has started buying from Chinese online retailers because of quicker shipping times.

“Sometimes, I need to use what I ordered right away. In that case, buying something from China is more effective,” said Kim.

Thanks to China’s closer proximity, products Korean people order from Chinese retailers arrive much faster than goods purchased from the U.S. In fact, it takes up to two weeks for products ordered from China to reach Korea, whereas delivery times are sometimes as long as a month from American e-commerce sites.

However, some experts warn that the growing number of South Koreans who are purchasing goods online from foreign sellers may hurt South Korea’s domestic markets.

Yeo Jun-sang, a professor at Dongguk University’s Business School in Seoul, recently told the South Korean daily Dong-A Ilbo that South Korean online marketplaces might be undermined by this phenomenon.

“Korean shopping malls should improve their product quality as well as diversify what they sell in order to compete with the Chinese online shopping mall,” he said.

Meanwhile, the Korea Customs Service announced in April that it has devised new policies that will help South Koreans purchase products from foreign companies to meet the increasing demand.

With the new policies, goods purchased from the foreign online marketplaces will be able to pass through Korean customs faster than before, which is expected to keep boosting demand for foreign products within South Korea.