Korean DF to continue offloading stock in home market after KCS decision

By Luke Barras-hill and David Hayes |

The Korea Customs Service (KCS) has announced it has extended assistance measures permitting duty free operators to sell surplus inventory in South Korea’s domestic retail market.

A temporary suspension of a KCS rule that ordinarily prevents the importation of goods designated for sale in duty free shops from entering local channels was due to expire at the end of this month.

KCS has also waived restrictions governing third party exports until the end of December, after allowances were made in April.

DAIGOU ‘LIFELINE’

TRBusiness was aware prior to today’s announcement that operators were pushing for relaxations on a bundle of regulations, including those that alleviate restrictions to allow large volumes of Chinese daigou shuttle trader purchases to continue despite restrictions on travel between China and South Korea.

Daigou customers are providing South Korean operators with a lifeline during the coronavirus (Covid-19) crisis as  regular international travel between South Korea, China, Japan and other Asian countries is disrupted, according to TRBusiness Asia Correspondent David Hayes.

Among the currently suspended KCS restrictions is one that limits the number of items that can be purchased to 49 items per duty free shop visit.

Korea Customs Service has announced the extension of a policy authorising duty free sales in the domestic market until further notice. Source: KCS.

As a result, duty free customers are no longer subject to any government limitations on the quantity of goods purchased per transaction, meaning fewer daigou customers now need to visit South Korea’s downtown stores to purchase large volumes of duty free goods.

However, customers remain subject to purchasing guidelines specified by individual cosmetics companies and luxury brands that limit the number of items of each product that individual customers can buy.

Foreign duty free shoppers are currently allowed to return their purchases to a third party and not necessarily the original retailer; another major change that assists daigou customers handle and consolidate purchases in preparation for them to be shipped abroad from South Korea.

“South Korea’s duty free market is completely relying on the Chinese customer market, but there are almost no regular travellers and sightseers now,” commented a duty free source in Seoul who preferred not to be named.

“There are almost no normal duty free sales now; operators are relying on shuttle traders to generate a profit. About 99% of duty free sales are to daigou wholesalers; the big weak point is they cannot give shops much profit.

“Most duty free shops are retaining about 70% of their previous duty free sales now, so they are 30% down from 2019.”

The Americas

Details emerge of JFK T1 commercial programme and duty free tender

Qualified travel retail operators are being invited to participate in a request for proposals...

Europe

Mondelez WTR launches Win a Diamond pop-up with Lagardère at CDG

Mondelez World Travel Retail (WTR) has unveiled an enhanced iteration of its Win a Diamond...

Middle East

JEDCO launches multi-category tenders at KAIA T1

Jeddah Airports Company (JEDCO KSA) has issued a request for proposals for several...

image description

In the Magazine

TRBusiness Magazine is free to access. Read the latest issue now.

E-mail this link to a friend