Nine out of ten small and medium-sized enterprises in Korea reported suffering from the domestic invasion of Chinese e-commerce platforms such as AliExpress, Temu, and Shein.
The Korea Federation of Small and Medium Enterprises published the results of a survey conducted on 300 manufacturing and distribution small and medium-sized enterprises from June 19 to July 4 regarding their response to the domestic invasion of Chinese e-commerce platforms on the 23rd.
The survey results showed that 96.7% of small and medium-sized enterprises experienced damage due to the full-scale entry of Chinese e-commerce platforms such as AliExpress, Temu, and Shein, while only 3.3% noted that they had almost no damage.
Regarding the types of damage, 59% reported a decrease in price competitiveness due to the influx of low-priced and tax-free products from China, followed by ▲ intellectual property infringement (17%), ▲ illegal resale of products purchased overseas (16%), and ▲ deepening of discrimination against products purchased overseas lacking certification and after-sales service obligations (4%).
Among corporations that experienced damage due to the domestic invasion of Chinese e-commerce platforms, 79% reported 'not taking any special response,' which is very high.
Reasons for not taking special measures included ▲ believing that the costs and efforts involved in responding were greater than the amount of damage (35.4%), ▲ difficulty in proving the damage or collecting related materials (27.4%), and ▲ lack of information on relevant organizations or departments (15.6%).
Regarding the proposed measure of abolishing the 'small goods tax exemption system,' which is mentioned as one of the responses to C-commerce, 71.7% favored this while 28.3% opposed it, indicating an urgent need to amend the system related to the tax exemption on small goods priced at $150 or less. The small goods tax exemption system grants tax exemption on products below a certain amount when purchasing from overseas.
In addition to reforming the tax exemption system for overseas purchases, the most needed government support was 'mandatory certification and regulation for overseas purchased goods' at 48.7%.
Choo Moon-gap, head of the Economic Policy Headquarters of KBIZ, noted, 'While C-commerce platforms may serve as opportunities for some small and medium-sized enterprises to develop overseas sales channels and engage in reverse export, it is a reality that, for small firms, the barriers to platform entry and lack of marketing capabilities result in more crisis factors than opportunities.' He added, 'The government must promptly prepare effective responses to ensure that domestic small and medium-sized enterprises can compete in a fair environment, including supplementing the small goods tax exemption system and product certification issues, and blocking illegal distribution.'