AliExpress sells top K-food maker’s products in S.Korea

AliExpress, an e-commerce arm of China’s Alibaba Group, on Thursday started selling products of CJ CheilJedang Corp., South Korea’s top food maker, to expand its market share on the peninsula and threaten domestic online retail platforms such as Coupang Inc. and Naver Corp.

AliExpress launched major promotions on CJ CheilJedang’s flagship products such as Hetbahn instant rice and the Bibigo dumplings. The Chinese e-commerce giant offered the Hetbahn rice at 21% lower prices than those of the food maker’s official online mall while giving customers who buy selected products within three days a chance to win a smartphone worth some 2 million won ($1,507).

CJ CheilJedang, which has the largest shares in the South Korean instant rice, dumpling and processed meat markets, opted to sell its products on AliExpress after conflict with Coupang, the country’s top e-commerce platform.

“It is natural for a manufacturer to secure a new channel for sales,” a CJ CheilJedang official said on the company’s move to sell products on AliExpress. “We expect it to contribute to business growth and increase customer choice.”

The food maker suspended sales of some products on Coupang in November 2022, citing the excessive margins of the New York Stock Exchange-listed retailer. On its side, Coupang said CJ CheilJedang demanded supply price hikes several times and supplied only half of the contracted volumes.

CJ CheilJedang has been expected to sell its products on AliExpress as its subsidiary CJ Logistics Corp. handles the Chinese company’s delivery services in South Korea, according to industry sources in Seoul.

EXPANSION INTO FRESH FOODS

AliExpress is expected to accelerate its expansion in South Korea with sales of CJ CheilJedang’s products, the sources said.

The e-commerce behemoth, which had been focusing on processed foods, started selling fresh foods such as fruits and meats in the country earlier this month. Domestic retailers had been projected to maintain their dominance in the sector as delivery times are key for fresh food.

AliExpress has dampened such expectations as it tried to improve logistics efficiency with its financial power and increase the number of users to lower purchase prices. The Chinese company is scheduled to complete a logistics center in South Korea this year, cutting its delivery times to one or two days.

South Korean competitors are scrambling to cope with the development. SSG.COM, the e-commerce platform of South Korean retail heavyweight Shinsegae Inc., plans to increase products for its next-day delivery service. Gmarket Inc. added fresh foods for a similar service.

Chinese e-commerce giants are rapidly expanding their presence in South Korea through aggressive pricing policies. AliExpress offered local companies zero commissions, under which it will not charge any sales fees through the end of March.

AliExpress’ monthly active users (MAU) more than doubled to a record high of 8.2 million in February from 3.6 million a year earlier, according to data from app analytics firm Wiseapp·Retail·Goods. The Chinese company became the second-largest e-commerce platform by MAU, beating local online retailer 11Street Co., which had an MAU of 7.4 million.

Write to Hun-Hyoung Ha and Ji-Yoon Yang at hhh@hankyung.com
 
Jongwoo Cheon edited this article.