Ministries to take on high markups on local imports
Foreign clothes, cosmetics, watches and bags that sell for exorbitant prices will be much cheaper in the near future, according to government officials yesterday.
The government said it plans to allow small, independent importers, known as “parallel” or “gray market” importers, to expand their operations in order to bring down the prices of products on which a few large importers have monopolies.
The Ministry of Strategy and Finance, the Ministry of Trade, Industry and Energy and the Korea Customs Service are working together to allow gray market importers to offer consumers imported goods at lower prices than wholesale importers. The concrete measures will be announced in March, officials of the Finance Ministry said.
A range of imported products are sold at much higher prices in Korea than in advanced countries, not to speak of their countries of origin. According to the National Council of Homemakers’ Classes, a civic group, a Louis Vuitton Alma Monogram Handbag sells for 1.56 million won ($1,477) here, 66.5 percent higher than the average price of 930,000 won in the U.S., France and United Kingdom.
Since May 2012, retailers have been allowed to import popular foreign brands like Lacoste, Toms, Levi’s and Calvin Klein. But only large retailers have enjoyed the benefits because customs rules are too difficult to navigate for small importers.
“Due to monopolies by a few importers, prices of imported goods are higher in this country than in others,” said an official at the Finance Ministry. “If parallel imports expand, competition among importers will grow, making them cut back on prices.”
To reduce prices on imports, the government is banking on smaller independent importers, who don’t import directly from the manufacturer or brand. They can set prices lower because they usually have lower overheads than official importers, such as the big department stores, and spend less on marketing.
A case in point is when E-Mart imported Canada Goose parkas and sold them at prices about 30 percent cheaper than domestic department stores.
The government believes if the number of independent importers rises and they import more, price competition will push prices down overall.
The government is also considering allowing retailers to import products in bulk from overseas discount stores like WalMart, Costco and even Internet-based malls like Amazon.
The government plans to lower customs barriers for these importers and simplify customs procedures. The Finance Ministry plans to allow increasing imports of foreign luxury brands that are in exclusive partnerships with particular Korean importers.
BY SONG SU-HYUN [email@example.com]
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