AliExpress takes fight to counterfeit goods infiltrating Korean market

Industry

Published: 06 Dec. 2023, 17:33 Updated: 06 Dec. 2023, 19:47

AliExpress takes fight to counterfeit goods infiltrating Korean market

Ray Zhang, general manager of AliExpress Korea, announces a 10 billion won ($7.6 million) investment plan against counterfeiting products during a press conference held in central Seoul on Wednesday. [ALIEXPRESS]

AliExpress committed to a 10 billion won ($7.6 million) investment plan over the next three years to tackle the pervasive issue of fake products infiltrating the Korean market using AI.

This marks the first plan against counterfeiting announced among the overseas regions where the Chinese ecommerce giant operates.

AliExpress under scrutiny for counterfeit items

Since entering the Korean market in 2018, AliExpress has rapidly gained ground, challenging local ecommerce giants by offering competitive prices and an extensive product range of more than 100 million items. The Chinese app has the third-largest number of users in Korea with over 6.13 million, chasing after its Korean counterparts like Coupang and 11Street.

Despite its success, the platform has faced ongoing scrutiny due to the prevalence of counterfeit goods.

A fake Samsung Galaxy Watch 6 product can be found on AliExpress on Wednesday. [SCREEN CAPTURE]

Recent data from the Korea Customs Service disclosed a record 62,326 cases of counterfeit products detected for intellectual property infringement by customs last year, while 99.7 percent were traced back to Chinese origins. For instance, a Samsung Galaxy Watch 6, typically priced at 200,000 won in the market, could be found being sold for as low as 30,000 won on the platform. The gravity of the situation led to the summoning of Ray Zhang, general manager of AliExpress Korea, during the parliamentary audit in October.

The controversy surrounding AliExpress's counterfeit products is not confined to Korea. It has also resonated in other regions where AliExpress has established its presence, including the United States and Europe. The European Commission sought clarification on policies addressing counterfeit goods by the end of November, while no concrete follow-up actions have yet been announced.

“We have proactively prepared and launched our IPR [Intellectual Property Rights] protection plan for Korea due to the importance of the Korean market,” said Zhang in response to an inquiry by the Korea JoongAng Daily on Wednesday.

“Korea is one of the top 5 markets for AliExpress. Due to the immense support from local consumers, we feel a heightened sense of responsibility to strengthen intellectual property and consumer protection,” the AliExpress Korea head added.

AliExpress introduced "Project Klean," a forgery detection system utilizing AI-based verification algorithms. It precedes any official investments regarding similar controversies in other regions.

This system aims to scrutinize product details such as names, logos, images and prices to identify counterfeit items. Additionally, AliExpress plans to implement random inspections, collaborating with third-party "mystery shoppers" to ensure the authenticity of products.

Users can request refunds within three months of purchase without the need for extensive documentation if they suspect they have received counterfeit goods.

Furthermore, AliExpress has taken localized measures to enhance IPR protection in Korea. The platform introduced a Korean-language portal and a dedicated email channel to receive and address complaints from Korean consumers.

Looking ahead, AliExpress hinted at plans to establish a logistics center in Korea next year.

Zhang, however, added, "AliExpress, being a platform, does not intend to build an independent logistics system [that includes delivery services], and instead we seek collaboration with local partners," referring to CJ Logistics, which currently handles all AliExpress's logistics in Korea.

While there have been speculations about AliExpress acquiring the Korean ecommerce platform 11Street, Zhang dismissed such claims.

BY SEO JI-EUN [seo.jieun1@joongang.co.kr]