[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.
AlphaBIZ Paul Lee(hoondork1977@alphabiz.co.kr)
