Thinking outside the box
The world is changing so fast we can hardly keep up with it. The new fad of shopping on overseas websites is one example. My first experience with a direct online purchase from overseas was toothpaste.
Last month, I went to the United States. I visited a major retail store and picked up whitening toothpaste of a foreign brand. My teeth are prone to stains. I have used all kinds of whitening products and they didn’t do much good. This one worked pretty well. A package of two tubes cost $9.50, or about 5,000 won each. I stopped by the shop and bought four more before I returned home. I couldn’t fit more into my luggage and the product wasn’t cheap for toothpaste.
But after I ran out, I began to regret my parsimony. I checked domestic online shopping malls. Each tube cost 19,500 won including delivery charges. That was way too expensive. So I logged into Amazon.com. A package of two cost $6.70. Twelve cost $37.32 including shipping charges. I ended up paying 5,000 won each - the same price I would get in an American department store. Payment was easy. I received my package in two weeks.
No wonder everyone seems to be buying things online directly from overseas. Korea’s direct purchases of goods from foreign online shopping malls is estimated to double to 2 trillion won this year from last year’s 1 trillion won. Shopping volume has doubled every year due to cheaper prices and growing convenience.
This all became possible because of three changes. Since the implementation of a free trade agreement between Korea and the U.S, two years ago, no customs are charged on products costing less than $200. Second, the advance of information and telecommunications technology makes online settlement and delivery fast. Third, Korea has become one of the biggest clients of American online retailers and Korean customers are getting VIP treatment. During the Black Friday shopping season, American department stores like Macy’s and Neiman Marcus all posted Korean-language guides to products on their websites.
Shopping no longer knows frontiers. But overseas shopping comes at the expense of domestic consumption. Local demand is so sluggish. Yet Koreans are busy shopping from overseas retailers. No one can force people to pay extra for the same product out of patriotism. Direct purchases of foreign goods is a trend no one can stop or reverse. Korea has free trade pacts with economies that account for 73 percent of the global economy. Tariff-free traffic is not one-way. We cannot hope for one-sided benefits for our products. The future brings unfamiliar and unpleasant things. It is the price we pay for opening up.
There is only one way to make this work entirely in our favor. We must sell our products online to people beyond our borders. Chinese and Southeast Asian consumers should be our first targets. Overseas shopping online by the Chinese has reached 27 trillion won annually and the amount is doubling every year, just like it is here. Korean products are popular among the Chinese due to Hallyu, or the Korean wave of pop culture products like music and television dramas. Foreigners entranced with Korean girl groups and movie stars should be encouraged to buy Korean products. The problem is how.
Shin Je-yoon, chairman of the Financial Services Commission, recently said, “We cannot expect the creation of a Samsung Electronics-like giant in the financial sector. But we can create another Samsung Electronics. This is the financial industry’s mission.”
What he was suggesting was collaboration between the world of finance and the ICT corporate sector. To make this possible, regulations must be lifted. The government cannot do everything alone. There are over 100,000 police officers, but crime does not end. Financial plans and crimes are the same. The government must provide a level playing field and the players - financial and retail companies - should do their best. Then there would be fair competition and technology advances.
But we are actually going in the opposite direction. We lay down regulation upon regulation. Financial companies do what they are told by the government. The financial sector is on its own Galapagos Island.
Security and convenience are contradictory. It’s like the military: If discipline is eased, soldiers’ morale goes up. If morale is too high, discipline is weakened. A balancing act is essential. The finance sector is dying because of overly stringent discipline. At this rate, Korea’s financial system could be worse than an African state.
JoongAng Ilbo, Dec. 4, Page 34
The author is an editorial writer of the JoongAng Ilbo.
by Yi Jung-jae