SOUTH KOREA. The Korea Customs Service (KCS) is set to implement a major regulation change affecting the duty free sale and pick-up of local products to foreign shoppers by the end of the year.
If introduced, duty free sales of Korean goods to resellers (daigou) would be reclassified as exports and similar processes and regulations applicable to normal exports would be implemented.
The regulation change would likely mean that both large- and small-scale sellers who purchase over US$5,000 worth of goods would be prevented from picking up local products onsite at duty free stores as they can at present. Instead, they will have to travel to a new ‘export pick-up desk’ located at an as yet unspecified site within the Incheon Free Economic Zone (IFEZ), in which Incheon International Airport is positioned, to report and process the goods as exports.
KCS officials say the reason behind the change is to allow for better management of duty free products in the Korean market. They wish to correct problems associated with unaccounted duty free goods being sold within Korea, a common complaint by Korean domestic retailers.
Limiting onsite pick up of local produce may create short-term headwinds to daigou activity. But as The Moodie Davitt Business Intelligence Unit’s Min Yong Jung has previously written, resellers have been able to successfully adapt to change so far, including the introduction of China’s new ecommerce law on 1 January.
The Korean media reported on a task force team operating at KCS to prepare a detailed plan for the creation of the export pick-up desk. With a plan in place, the KCS can locate a site within the IFEZ and prepare the necessary IT infrastructure with relative ease.
Look out for a full analysis of the potential impact of the regulation change in the upcoming issue of The Moodie Davitt eZine, out soon.
