Sales on Chinese cross-border e-commerce platforms in South Korea have plummeted following the discovery of carcinogens in some popular items.
South Korea, a significant market for China’s surplus low-cost products, recently detected dangerous levels of cadmium and lead in goods sold on platforms such as AliExpress and Temu, which led to a 40 percent drop in sales from these platforms in April as per a recent survey by South Korea’s BC Card revealed.
These Chinese e-commerce giants had earlier captured the South Korean market by offering ultra-low prices, aggressive discounts, new member incentives, and cash vouchers. However, their failure to ensure product safety has severely damaged consumer trust, resulting in the massive exodus of users.
The decline was most pronounced in low-priced products.
BC Card’s analysis of April transaction data showed a 55.2 percent decrease in transaction volume for orders below 5,000 Korean won ($3.70). Orders between 5,000 and 10,000 won ($3.70 to $7.30) saw a 42 percent decrease, while those between 10,000 and 30,000 won ($7.30 to $22) decreased by 35.2 percent.
The impact extended beyond sales, affecting user numbers and new app installations. Data from South Korea’s largest mobile device data platform company, IGAWorks, indicated that Temu experienced a 40 percent user attrition rate in April, while AliExpress saw a 27 percent attrition rate. Temu’s new installations plummeted from 110,000 on April 1 to 50,000 by May 10, and AliExpress’s installations dropped from approximately 33,000 to 16,000 during the same period.
The crisis began in early April when the South Korean government announced the detection of carcinogens in products from AliExpress and Temu. On April 7, Incheon Main Customs under the Korea Customs Service reported that an investigation into 404 jewelry items sold on these platforms revealed that 96 items contained cadmium and lead, exceeding set standards by 10 to 700 times.
Both cadmium and lead are classified as carcinogens by the International Agency for Research on Cancer (IARC). Cadmium poisoning can lead to respiratory, renal, and digestive diseases, while lead poisoning affects the renal, central nervous, digestive, and reproductive systems.
Additionally, on April 8, the Seoul city government announced that safety checks on 31 children’s and household items listed as bestsellers on AliExpress revealed that eight products contained phthalate plasticizers (DEHP and DBP), exceeding the standards by up to 56 times.
Government Measures Before Children’s Day
Ahead of Korea’s Children’s Day on May 5, the Seoul city government conducted safety inspections on 22 popular children’s products available on AliExpress and Temu. The results were alarming, with 11 products found non-compliant. Phthalate plasticizers were detected at levels exceeding standard values by 324 to 348 times, and some products had lead content 33 times above the acceptable limit.
Phthalate plasticizers, such as diethylhexyl phthalate (DEHP), are reproductive toxins that can cause infertility and are classified as possible carcinogens (Group 2B) by the International Agency for Research on Cancer (IARC).
Additionally, on April 30, the Korea Customs Service revealed that an analysis of 252 children’s products sold at ultra-low prices on AliExpress and Temu found harmful substances exceeding standards by up to 3,026 times in 15 percent of the products. These harmful substances included cadmium, lead, and phthalate plasticizers.
A survey by the Korea Chamber of Commerce and Industry involving 800 consumers who used AliExpress, Temu, and Shine over the past year showed that 80.9 percent of users were dissatisfied or had suffered losses using these platforms. Another survey by the Korea Consumer Organization revealed that South Korean consumers see no advantage in these platforms other than price, with 64.3 percent citing “poor product quality” as their main dissatisfaction.
In response to these quality issues, the South Korean government has pledged to intensify inspections and management. A government official from the State Coordination Office said the government is overhauling its overseas product regulation strategy, starting with quality inspections. Previously, only individual entities like the Customs Service and Seoul city government conducted quality checks. Going forward, multiple departments will be involved in quality inspections.
Moreover, in mid-May, AliExpress and Temu signed a consumer safety agreement with the Korea Fair Trade Commission, committing to ensure consumer safety and health. Although the agreement includes a clause requiring the disclosure of seller information, there are still numerous violations on these platforms with undisclosed seller information.
A mobile phone displays the Temu APP interface in Shenzhen, Guangdong Province, China, Oct 28, 2022. CFOTO/Future Publishing via Getty Images
Intense Pressure from Chinese E-Commerce
China’s current economic downturn has led to significant overproduction in many industries, creating immense challenges in boosting domestic demand. As a result, China is exporting surplus products at ultra-low prices, shaking up the global trade market, with South Korea becoming one of the primary targets for Chinese e-commerce.
Despite its relatively small land area and population, South Korea boasts a substantial online shopping market. Last year, South Korea’s online shopping market reached 227 trillion won ($166.1 billion), setting a historic record. Globally, it ranks fifth, following the United States, China, Japan, and the United Kingdom.
South Korea’s proximity to China, high internet penetration rate, excellent logistics infrastructure, and a concentrated population in the capital region make it a prime market for e-commerce. Consumers in South Korea are characterized by their purchasing power and sensitivity to trends.
According to data released by Statistics Korea, China accounted for 48.7 percent of last year’s total overseas direct purchases, an increase of 121.2 percent compared to the previous year. In the first quarter of this year, China’s share rose to 57 percent, indicating a robust growth trend.
The aggressive expansion of Chinese cross-border e-commerce platforms has intensified competition within South Korea’s e-commerce market. Coupang, South Korea’s leading e-commerce company, reported an operating loss in the first quarter of this year, marking a return to losses after seven quarters of profit and casting doubt on its goal of maintaining annual profitability for two consecutive years.
As of February, AliExpress and Temu ranked second and fourth, respectively, in terms of app users in South Korea.
The impact is not limited to South Korea’s e-commerce companies; small and medium-sized enterprises (SMEs) producing these products have also suffered. A survey conducted in March by the Korea Federation of Small and Medium Business, involving 320 SMEs affected by direct purchases from Chinese e-commerce platforms, revealed that 80.7 percent of the companies reported decreased sales or feared a decline due to direct Chinese purchases.
Lisa Bian, B.Med.Sc., is a healthcare professional holding a Bachelor's Degree in Medical Science. With a rich background, she has accrued over three years of hands-on experience as a Traditional Chinese Medicine physician. In addition to her clinical expertise, she serves as an accomplished writer based in Korea, providing valuable contributions to The Epoch Times. Her insightful pieces cover a range of topics, including integrative medicine, Korean society, culture, and international relations.
