Concern over counterfeits from AliExpress, Temu prompt crackdown

Home > Business > Industry

Concern over counterfeits from AliExpress, Temu prompt crackdown

Published: 02 Apr. 2024, 07:00 Updated: 02 Apr. 2024, 13:17

LEE JAE-LIM
lee.jaelim@joongang.co.kr

Employees at Incheon Airport Regional Customs inspect stacks of products shipped from overseas at its logistics center on Nov. 22, 2023. [YONHAP]

[NEWS ANALYSIS]

The rapid expansion of Chinese platforms like AliExpress and Temu within the Korean e-commerce sector is sparking concerns about intensified competition for local players as user complaints over counterfeit goods surge.

The Korean government has promised to clamp down on the rising number of copycat items deriving from Chinese shopping platforms.

A government agency that has been largely affected by the recent influx in the number of items imported from China is the Korea Customs Service, tasked with rooting out knock-off products.

The mounting volume of overseas orders to screen is affecting the work-life balance of customs employees, according to Incheon Airport Regional Customs official Kim Si-tae, who is in charge of X-ray inspections for overseas goods.

"Due to the sharp increase in cargo volume, there is an absolute shortage of personnel for X-ray screenings of all incoming cargo," Kim said. "Employees are working from 7 a.m. to 2 a.m. daily aside from their lunch breaks to cope with the workload, but it's still not enough. To secure a sufficient workforce, we have no choice but to restrict employees' vacations and training."

Through the screenings, employees single out cargo presumed to be counterfeit by comparing the price on the customs declaration form. For instance, if a designer logo appears in the X-ray but the item is priced under 100,000 won, it is added to another pile for further inspection. Once confirmed that it is a knock-off, it is confiscated.

Kim says that a large chunk of counterfeit goods derive from China, and sneaky methods to deceive the customs agency are becoming more creative.

"I've seen a case where [the sellers] attempt to conceal metal logos attached to bags and belts by wrapping the area with packing paper and adding pieces of lead so that the logos are concealed in an X-ray," he said.

graph

The number of e-commerce items sold by the likes of AliExpress and Temu undergoing customs clearance jumped 36.75 percent on year to reach 131.4 million cases in 2023, the highest surge over the past four years.

Items from China took up 68 percent of the total figure with 88.81 million. Incoming products from the United States followed with 19.29 percent, or 25.36 million.

In dollars, items from China were worth $2.36 billion, or 45 percent of the total value of e-commerce items last year.

To cope with China's shoddy products and knock-offs, the Fair Trade Commission (FTC) also announced a set of bill proposals to protect consumer rights, such as requiring foreign e-commerce companies to designate a legal representative in Korea and establish communication channels dedicated to customer complaints.

Legal experts remain doubtful that such countermeasures will be truly effective in protecting consumer rights.

“For example, even if counterfeit goods are distributed on an e-commerce platform, it has been confirmed through domestic and international precedent that the responsibility does not fall on them — the court cannot ask them to filter out trademark violations or impose liability for damage,” said Prof. Shin Ji-hye of Hankuk University of Foreign Studies Law School. “While a seller of counterfeit goods can be held accountable, platforms, as long as they do not violate their duty of care in management and supervision, cannot be held responsible, as they must ensure the free circulation of information.

“That’s why the local E-commerce Act requires businesses joining a platform to adequately disclose their information to consumers. But for overseas platforms, most of them are not obligated to disclose that information in accordance to the laws of their home countries. Therefore, when counterfeit or harmful goods are distributed, it is difficult for consumers to immediately find someone to hold accountable.”

Moreover, Shin added that what consumers basically want from these platforms is a fast refund or exchanges — not engaging in civil lawsuits for compensation.

Attorney Jang June-young of Shin & Kim says it all boils down to cooperation from platform operators and their commitment to playing by domestic rules.

“The same laws are applied whether that platform is Korean or foreign, but for foreign operators, it’s realistically difficult to launch a probe or impose regulations. Unlike the U.S. Big Tech companies like Google and Meta, which have well-established offices and liaising, Chinese operators still lack experience in this area, and that’s why we are growing worried about whether they are subject to the same regulations as domestic companies.”

Making it mandatory to appoint a legal representative is a step toward establishing credibility between the government and the Chinese entities, Jang believes, and if necessary, a more radical approach exists to compel them to cooperate: blocking the platform's domestic access within the country.

"This measure is called ‘immediate compulsion,'" he said. "It’s not done randomly but if certain conditions are met and if there are illegalities involved, even after issuing a corrective order, a platform can be banned from the country to demonstrate the effectiveness of regulations through coercion.”

BY LEE JAE-LIM [lee.jaelim@joongang.co.kr]