[Alpha Biz= Paul Lee] The rapid expansion of ultra-low-cost Chinese e-commerce platforms such as AliExpress and Temu in the Korean market is significantly worsening Korea’s cross-border e-commerce trade balance, a new report warns. While Korean consumer purchases from Chinese platforms have soared, Korean companies’ cross-border sales to China have sharply declined.



According to the Korea Institute for International Economic Policy (KIEP)’s July 2 report titled “China’s Digital Trade Strategy and Its Implications”, Korea recorded a 6.003 trillion won ($4.3 billion) deficit in cross-border e-commerce in 2023. That figure has ballooned 600-fold in just four years, from a deficit of 100 billion won in 2019.



Korean consumer purchases on Chinese digital platforms amounted to 3.23 trillion won in 2023, up 53.2% year-on-year, after surpassing purchases on U.S. platforms in 2022. In contrast, Korea’s cross-border e-commerce exports to China plunged from a peak of 5.2 trillion won in 2020 to just 1.05 trillion won in 2023, a drop of nearly 80%.


The report attributes this reversal to China’s state-led digital trade strategy, including:

Designation of digital service export hubs

Establishment of cross-border e-commerce pilot zones offering tax incentives

Expansion of international payment systems like Alipay



China’s digital services accounted for 56.7% of its total service exports in 2023, and it became the world’s largest B2C cross-border e-commerce market in 2022.



KIEP emphasizes that Korea must urgently pursue regulatory reform and develop homegrown e-commerce platforms to compete in the global market. It also calls for active participation in setting international digital trade norms to avoid being sidelined in the evolving digital economy.

 

 

 

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