South Korean authorities are investigating collecting and using personal data by Chinese cross-border e-commerce platforms, including AliExpress and Temu.
According to the report, the Personal Information Protection Commission under the Prime Minister of South Korea is conducting a questionnaire survey to understand the policies of these e-commerce platforms in handling personal data, the process of obtaining customer consent, whether the data is stored within China, and whether it is transferred to third countries.
The authorities will demand corrections and fines if violations are found after the investigation.
South Korean statistics show that as of March 2024, AliExpress and Temu have more than 8 million users in South Korea, second only to local e-commerce giants. Authorities have established a special task force to address the entry of Chinese cross-border e-commerce into South Korea.
An earlier report by the Financial Times pointed out that South Korea’s online retail industry is highly developed. Chinese e-commerce platforms offering numerous high-quality and affordable products are entering the South Korean market, competing with local companies and American brands.
In 2023, the purchase volume of South Korean consumers on Chinese e-commerce platforms exceeded that of Amazon and other American counterparts for the first time. Some business experts believe that South Korean local e-commerce platforms may not have the upper hand in the long-term competition.
The report noted that Alibaba’s AliExpress and Temu are the two most popular Chinese e-commerce platforms in South Korea, ranking third and fifth among all e-commerce platforms in the country. The Chinese fast fashion giant Shein is also entering the South Korean market.
Analysts point out that platforms like AliExpress attract South Korean businesses with zero commission offers, which is more appealing than other platforms’ 10% to 20% commission rates. Additionally, AliExpress has abundant warehouses in Shandong Province, China, which is close to South Korea, helping to ensure fast delivery times.
A South Korean consumer said the rearview mirror he bought on AliExpress was priced at only 86,000 KRW, far lower than the 540,000 KRW listed on local Korean retail websites. “Most products on these Chinese platforms are unbelievably cheap,” he remarked.
While implementing low-price and other promotional tactics, Chinese platforms should also focus on strengthening data protection compliance. They must ensure adherence to the data protection regulations of various countries and establish a transparent end-to-end process to address potential investigations.