Trade deficit of online shopping is up to $1.5B
According to data disclosed by the Korea Customs Service on Monday, purchases made by foreigners at Korean online malls were worth $28.1 million, leading to an e-commerce trade deficit of about $1.52 billion.
And the gap between foreign goods purchased by Koreans and local goods purchased from overseas is getting larger. The $1.52 billion online trade deficit last year was 5.6 times bigger than the $272 million recorded in 2010.
The customs authority explained that Korea’s e-commerce imports showed an annual growth rate of about 40 percent since 2010 and is expected to continue to grow sharply.
The growth was reflected across all products after the Korean government eased regulations on imports last year.
The government relaxed its online direct purchasing rule in June last year, waiving tariffs on products worth less than $200 except for food, drugs and agricultural products that require safety checks or quarantine. Before the change, only six products were subject to the waiver.
The revision also led to the creation of small import companies. Before, only businesses with more than 100 million won in assets and more than three employees were eligible to apply with the government for a license.
Koreans spent the most money at overseas online malls on health supplements, accounting for nearly 22 percent of total online direct shopping in 2013. Purchases amounted to $123 million that year and supplements have been the top seller for the past five years. Fashion and beauty products, including cosmetics, luxury bags and clothes, were also popular, with $262 million spent on those goods in 2013.
As the gap between e-commerce imports and exports grows, analysts have said that local online retailers should rush to introduce easier payment systems to boost spending from overseas.
President Park Geun-hye started pushing the government and the financial sector last year to come up with a single-click payment system similar to PayPal or Alipay to boost exports. Local card companies such as KB Kookmin Card and BC Card launched their own trial systems.
At an annual briefing to the Blue House last week, the Financial Services Commission and the Ministry of Science, ICT and Future Planning promised they will require Korean online malls to introduce one-click payment options by March. For users who want extra data protection while paying online, the ministry and FSC introduced a program that only needs to be installed once.
However, some information security experts say that the Korean payment service is not secure enough yet, and that ActiveX is still the safest option.
“The Korean financial sector and payment companies should take more responsibility, rather than giving the responsibility of data protection to users. The companies should prepare a stronger data protection system inside their data processing system like other foreign services do,” said Kim Seung-joo, a professor at Korea University’s Graduate School of Information Protection, in a radio interview last week.
Meanwhile, the Fair Trade Commission said that it will try to protect local consumers.
The consumer watchdog said that cooperation between countries is essential in solving this matter. To do so, the FTC said that it will participate the United Nations Commission on International Trade Law meeting in New York next month and discuss the issue.
BY KIM JI-YOON [email@example.com]