[Gangnam Perspective] Will the Coupang Controversy Be Overlooked Again?

What was the biggest news that shook the distribution industry in 2024 and 2025? Last year, it was the controversy over Chinese mobile commerce, led by Temu and AliExpress, which disrupted Korea’s retail market. This year, it is the Coupang incident, involving an 'American company.' Few would disagree with this summary. Interestingly, the uproar over Chinese mobile commerce has subsided this year. Back then, there was talk of regulatory action, but now these companies are operating smoothly. Shinsegae has even partnered with Alibaba Group to expand its business. Korean consumers seem to have forgotten the past. So, what about Coupang? I would wager that the outcome will be no different.
When the question is flawed or overly complicated, the solution will also be flawed or ambiguous. The Coupang controversy is a perfect example.
First, the accusations and penalties aimed at Coupang are all mixed together. To summarize, the main issues are responsibility for personal data leaks, overwork-related deaths among overnight delivery workers, and allegations of political lobbying. Remedies discussed include business suspension or fines imposed by the Korea Fair Trade Commission (KFTC). Some believe that the KFTC's measures will only leave a minor scratch on Coupang, now a retail giant. There is also a class action lawsuit in the United States. While this lawsuit could deal a significant blow to Coupang, it mainly concerns shareholder losses. In any case, both actions are limited to the data leak issue. If penalties are properly imposed for this matter, will public opinion in Korea simply overlook other issues such as overnight delivery or lobbying allegations?
Second, there is a sense of futility created by the 'foreign company' narrative. When Temu and AliExpress were criticized, the fact that they were 'Chinese companies' was emphasized. Before the current controversy, Coupang was widely seen as an 'American company founded by a Korean.' People wanted to consider it 'our company.' However, following the data leak incident, the qualifiers have been dropped and it is now simply regarded as an 'American company.' How do we define domestic versus foreign companies? At one point, the foreign ownership of Naver Corporation, considered a national company, exceeded 50%. In today’s world, are there any major retail platforms operated solely with domestic capital?
Third, some argue that neglecting the Distribution Industry Development Act allowed foreign companies like Coupang to benefit. However, this only obscures the real issue. The Distribution Industry Development Act is not designed to regulate online platforms, but to protect offline retail and small businesses. Online platform regulations are covered by separate laws such as the Act on the Consumer Protection in Electronic Commerce, Etc. These regulations apply equally to all major domestic online platforms, not just Coupang. Of course, domestic retailers focused on offline business may face disadvantages. Nevertheless, the choice between offline and online strategies is purely a management decision for each company.
Fourth, we must confront the reality that consumers are also delivery workers. Many who criticize the poor working conditions at Coupang’s logistics centers also use Coupang’s Rocket Delivery service. Even as they worry about overworked delivery drivers, they still click on 'overnight delivery.' Consumers who are outraged by labor issues continue to use these services. Because this issue is intertwined with ethical consumption and Environmental, Social, and Governance (ESG) Management, finding a solution is not simple.
Consumers want a retail platform that is cheap, fast, convenient, and treats its workers well. Preferably, they want it to be a domestic company. To enjoy such companies and services, we must first clearly distinguish the issues surrounding the Coupang controversy. Then, we must rigorously seek solutions for each point of contention. Ultimately, it is necessary to rethink the perspective on the distribution industry. The outdated view that only manufacturing matters and distribution is merely a part of gross domestic product (GDP) must change. The future of the industry lies in logistics with disruptive power and a data-driven economy combined with Artificial Intelligence (AI). On this foundation, industrial advancement and consumer ethics can be balanced.
Anger brings only fleeting satisfaction. Yesterday it was Temu and AliExpress, today it is Coupang, and tomorrow, what company will become the next target?
jjack3@fnnews.com