As online platforms spread and China's e-commerce mounts an ultra-low-price dumping offensive that is rapidly encroaching on the domestic market, there was a pointed observation that domestic small and midsize enterprises are facing a survival crisis.
Oh Se-hee of the Democratic Party of Korea on the National Assembly Trade. Industry Energy. SMEs. and Startups Committee said at the Small and Medium Venture Business Ministry's audit on the 14th, "Ultra-low-price dumping and counterfeit goods originating in China are destroying the domestic manufacturing and distribution ecosystem," adding, "This is a grave situation that, along with a survival crisis for small and midsize enterprises, shakes the trust in K-brands to the core."
According to the "Survey of small and midsize enterprises on responses to the entry of Chinese e-commerce platforms into the domestic market" conducted by the Korea Federation of Small and Medium Enterprises, 96.7% of responding SMEs experienced damage, and 79% of affected companies said they had "effectively given up responding." This shows that eight out of 10 domestic SMEs are helplessly collapsing in the face of a massive onslaught of Chinese capital. In particular, damage is concentrated in Korea's key consumer goods sectors such as K-beauty, fashion, and household goods.
Oh said, "Products nearly identical to domestic cosmetics brands and designs are being sold on Chinese platforms for less than one-tenth the price of genuine goods," noting, "Consumer harm is occurring beyond intellectual property infringement, as consumers mistakenly purchase them thinking they are genuine domestic products."
Overseas direct purchase transaction value surged about threefold from 2.7 trillion won in 2019 to 8 trillion won in 2024, with Chinese products accounting for 61.4%. In addition, the Chinese e-commerce platforms AliExpress and Temu rank second and third among domestic shopping apps, rapidly collapsing price order in the domestic distribution ecosystem.
Regarding overseas direct purchases such as Chinese e-commerce, the United States will abolish the duty-free threshold of $800 (about 1.14 million won) entirely starting in 2025 and impose an average 30% tariff on Chinese products. The European Union (EU) will also apply tariffs to direct-purchase items under 150 euros (about 240,000 won) starting in 2028, and Australia is already imposing a 10% value-added tax on products under 1,000 Australian dollars (about 930,000 won). In contrast, Korea still maintains a duty-free threshold of $150 (about 210,000 won), and people in the SME field are calling for improvements related to this.
Oh emphasized, "The e-commerce offensive originating in China goes beyond simple price competition and could lead to the collapse of national industrial competitiveness and trust in K-brands," adding, "The government must quickly prepare industry protection policies, including stronger crackdowns on counterfeit goods and measures to prevent disruption in the e-commerce market, so that affected companies no longer give up responding."