Research Article
Overcoming the Hetbahn Crisis and Stepping Stones to Growth by CJ CheilJedang: Conflict with Coupang and the Strategic Alliance with AliExpress
1 Hanyang University
Published: January 2024 · Vol. 28, No. 4 · pp. 1-33
DOI: https://doi.org/http://dx.doi.org/10.17287/kbr.2024.28.4.1
Full Text
Abstract
This case study aims to discuss the bargaining power and strategic alliances of CJ CheilJedang and its partnership with Aliexpress after a conflict with Coupang over the supply of Hetbahn. CJ CheilJedang, which has dominated the Korean instant rice market since the launch of Hetbahn in 1996, faced a conflict with Coupang, an emerging leader in the e-commerce and distribution industry, over the unit price in 2022. CJ CheilJedang and Coupang had a variety of issues to resolve besides the unit price and, in the end, Coupang stopped ordering from CJ CheilJedang. CJ CheilJedang tried to replace Coupang's distribution route by expanding its own mall and strengthening strategic alliances with other retailers. As a result, CJ CheilJedang was able to prevent a drop in sales, but the steady rise in sales was hindered. In its search for new distribution channels, CJ CheilJedang also partnered with Aliexpress, a large Chinese e-commerce and distribution company. At the time, Aliexpress was rapidly expanding into the Korean market, but consumer distrust was a major hindrance. The strategic alliance with CJ CheilJedang, and the retailing of CJ CheilJedang's Hetbahn and other products, was expected to improve Aliexpress's consumer trust in Korea and its share of the Korean market. The strategic partnership between CJ CheilJedang and AliExpress was driven by the convergence of CJ CheilJedang's necessity for an expanded distribution network and AliExpress's Korean market strategy, generating a win-win scenario for both companies. This collaboration enabled CJ CheilJedang to strengthen its position in the Korean food market and mitigate the impact of its disputes with Coupang. Nonetheless, as the strategic alliance is still in its early stages, and the tangible benefits are yet to be realized, it remains to be seen what will happen in the future.
