On imports, let the buyer be awareForeign brands are sold at exorbitant prices in South Korea compared with other markets due to abuses by importers. According to a comparative study by the JoongAng Ilbo, a pint of Haagen-Dazs ice cream is sold here at a price 4.2 times higher than in the United States and nearly double the price tag in Japan. The Korean price for a Snickers chocolate bar per gram is 32 percent higher than in Japan. The gap is even wider in luxury brands. An Armani wristwatch that costs 950,000 won ($899) here is 640,000 won in the United States and 590,000 won in Japan. Experts say that even considering variations in marketing, distribution and labor costs, a price difference of more than 30 percent is profiteering.
Exclusive contracts between local distributors and multinational manufacturers are to blame. They are able to charge whatever they want because of their monopoly status. More than one importer must be able to bring a product into the country in order to bring down prices. Under parallel importing, an importer without an authorized retail contract can sell equivalent goods at cheaper prices by purchasing them through unauthorized channels. Parallel importing has been legal in Korea since 1995. But it has remained in a gray area for the past two decades. They contribute to lowering the high prices of import items, but are not popular because of poor after-sale service, difficulty getting refunds and the fear of knockoffs.
To vitalize parallel importing, authorized distributors must be reined in on their bullying and unfair practices. Authorized distributors intimidate and employ various means to shut down unauthorized rivals. A retailer supplied by a parallel importer said he was even threatened by the authorized distributor of the brand.
Unreasonable regulations must be lifted. Heads of parallel import cosmetics businesses are even required to take a psychology test because the food and health authority adopted the same regulation that is applied to cosmetic manufacturers to prevent consumer problems. And if authorized distributors claim the products are counterfeit, the customs authority delays clearance of items brought in by parallel importers. They are treated as counterfeiters.
Local buyers also should change. Foreign companies will continue ripping off local consumers if they keep paying extra for the brand. European luxury brands keep on raising local prices even as tariff and foreign exchange rates have come down. Even popular overseas brands sell at high-end prices here. Korean consumers must be more vocal and active to demand their rights involving foreign brands.
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