SOUTH KOREA. Korea Customs Service (KCS) today announced an extension to relief measures that allow duty free retailers to sell products in Korea’s domestic channels and as third party exports, writes The Moodie Davitt Report Senior Retail and Commercial Analyst Min Yong Jung* in Seoul. The relief measures were set to expire on 29 October. Domestic sales of duty free goods (with relevant taxes and duties imposed) will be permitted until further notice while third party exports are allowed until year end.
As reported, under guidance announced on 29 April, KCS temporarily allowed:
1) Local distribution through ecommerce and other channels of unsold duty free inventory (limited to items held by retailers for over six months)
2) The transfer of ownership of unsold imported foreign goods to another party
3) International shipping and sales of unsold imported foreign goods overseas.
KCS’ move to support Korea’s beleaguered duty free market was expected; the Customs organisation notified The Moodie Davitt Report in mid-September that the relief measures were under review and added that extensions were likely.
According to National Assembly Member Kyungho Choo, third party exports grossed KRW586.5 billion (US$498.3 million) from 1,305 transactions until 2 October. The data revealed by Choo today underlines the role of third party exports in recent market growth. Sales via this channel grew from just 1% in May to 15% in August. Without third party exports, August duty free sales (as reported by the Korea Duty Free Association) would have fallen by -43%, and not -33% year-on-year.
One leading duty free retailer told The Moodie Davitt Report that the extension of both relief measures was positive but added that the industry hopes for additional measures, as discussed during KCS’ recent national audit. These range from a possible reduction in duty free licence fees to allowing passengers on ‘flights to nowhere’ to buy duty free during their trips.
*Note: Korean national Min Yong Jung, formerly based in London and now in Seoul, is Senior Retail and Commercial Analyst at The Moodie Davitt Report. His appointment in June 2019 was the first of its kind in travel retail media. It marked the creation of the Moodie Davitt Business Intelligence Unit, a new division designed to provide a previously unseen level of research and analysis for the travel retail channel.
Do you have research needs related to the Korean and Asia Pacific travel retail and luxury markets? Min Yong Jung can be contacted at minyong@moodiedavittreport.com
