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Why Can’t TikTok Shop Break Into Korea? U.S. Pressures and Local Giants Stand in the Way

Daniel Kim Views  

TikTok filed a trademark for TikTok Shop at the end of last year but has yet to unveil it to consumers. Analysts believe that the launch has been delayed due to the intensifying competition in domestic e-commerce and issues surrounding TikTok’s expulsion from the United States.

On the 29th, the IT industry cited the fierce competition in the domestic commerce market and the rise of C-commerce as reasons for the delay in the launch of TikTok Shop. Despite filing a trademark at the end of last year, TikTok has not shown any signs of launching the service. TikTok recently announced that the launch schedule for TikTok Shop is still undetermined.

TikTok Shop first launched in Indonesia in 2021 and has since expanded to eight countries including the United States, the United Kingdom, Indonesia, Malaysia, Singapore, the Philippines, Vietnam, and Thailand. Despite being expelled once from Indonesia, TikTok’s acquisition of e-commerce company Tokopedia indicates its importance as a core revenue business. According to the Korea Trade Association, TikTok Shop’s global revenue last year was estimated to be around $200 billion, a nearly fivefold increase from the previous year. According to the Mobile Index, as of April, TikTok’s Monthly Active Users (MAU) exceeds 4.52 million. Despite the sufficient user base, the fierce competition in the domestic e-commerce market is cited as a reason for the delay in the launch of TikTok Shop.

The commerce revenues of Naver and Coupang continue to grow. Naver recorded revenues of KRW 6.605 trillion in the fourth quarter of last year and KRW 7.034 trillion in the first quarter of this year, a growth of 16.1% compared to the same period last year. Coupang recorded revenues of KRW 8.6555 trillion in the fourth quarter of last year and KRW 9.4505 trillion in the first quarter of this year, showing a growth of approximately 9% from the previous quarter.

Although AliExpress and Temu do not disclose their revenues, WiseApp, Retail, and Goods estimated their payment amounts for the first quarter of this year to be KRW 819.6 billion and KRW 31.1 billion, respectively.

An industry insider said, “We understand that the launch of TikTok Shop in Korea is continuously delayed due to pressure from e-commerce giants,” adding, “With even Ali and Temu entering the market, the competition in e-commerce in Korea is particularly fierce, which would cause a lot of deliberation over the launch date.”

Experts believe that the issue of TikTok’s expulsion from the United States also had an impact. Last month, the United States passed a bill forcing the sale of TikTok’s U.S. operations. If the sale falls through, the service will be banned in the U.S. altogether, effectively making it an expulsion law. Professor Suh Yong Gu of Sookmyung Women’s University predicted, “Due to the atmosphere of TikTok’s expulsion from the U.S., there may not be enough resources for TikTok Shop to enter Korea.” However, he also added, “The Korean e-commerce market is considered attractive as it has the second highest per capita spending after the U.S., so the launch is just a matter of time.”

Daniel Kim
content@viewusglobal.com

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