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South Korea - MARKET ACCESS

Import regulations and customs duties   - Distribution - Transportation of goods - Standards - Patents and brands


Import regulations and customs duties

Regulations


Most of the products can be imported today in South Korea without any license. A declaration of importation replaced the former system of license and has to be filled in by the importer. There is also a system of control of the goods on arrival on the territory. According to the classification of the importer by the Customs ("honest", "quasi-honest", "under general supervision" and "under special supervision") the goods will be more or less controlled. If the importer has already been caught in a situation of non conformity, his products have strong chances to be systematically controlled. The procedures of controls do not only consist in checking the equivalence of the goods imported with the presented documents, but also in checking the correspondence of products with the Korean rules (standards, phytosanitary rules, fumigations). When importing foodstuffs, the detail of the conponents of the product (percentages of every ingredient) must be joined to the declaration of import.
Only some products included in a " Negative list " (Export and Import Note) are either regulated, or forbidden. Licenses for these products are delivered on a case by case basis, after a study achieved by the competent Ministry and the consultation of the corresponding professional associations. It can happen that these associations are constituted by rival local companies of the imported products, what does not simplify the import.
The marking of the origin of the products is also compulsory and should be indicated either in Korean, Chinese or English. The name of the country of origin, preceded by"made in" or "product of" should be quoted in such way that the final user can read it and understand it easily. Depending on the product, this marking should be quoted either directly on the product, or on the packaging. However, even if there are some exceptions in this obligation, it is advised to enquire beforehand with the Korean services of customs.

 


Customs duties


South Korea applies the Harmonised Customs System. The customs duties are calculated Ad valorem on the CIF value. The Korean Customs are in charge of the implementing the legislation.
Although on average the customs duties approach 8% (0% to 2% for raw materials, 5% for semi-manufactured products, 8% for manufactured goods), there is still a strong taxation on certain products, especially agricultural products. For these products, there is a certain number of tariff quotas, for which the duties are either reduced, either at 0%. Rates outside quotas are really prohibitive (up to 400 % for certain products). In certain cases, these quotas are assigned by auction. They can also be assigned on the basis of recommendations of local producers associations. Please note that rice import is completely controlled by the government, which accepts the entry of rice only for industrial purposes and refuses that some imported food rice is sold to the consumers.
Besides, Korea applies a system of "rights of adaptation" to protect certain activity sectors. As a rule, these rate increases are applicable for 12 months. In 2000, 27 products were concerned, notably seafood, agricultural products and textiles.
Within the perspective of entering the OECD, Korea decided to set up a system of reduced rates for developing countries.

 


Import taxes


There are several other taxes:
  • Special excise from 10% to 20% which applies not only to luxury goods (sunscreen or washing machines being for example listed in this category), but also to automobile vehicles and certain consumer goods. It is applied to the good's customs cleared value.
  • Liquor Tax: it differs from one product to another (115% for beer, 30% for fruit-based liquors, 72% for spirits).
  • Transportation tax: 15 in 20% on vehicles.
  • Educational tax of 30% which applies on the amount of the other special taxes.

 





Distribution


The liberalisation of the commercial distribution market came into force on January 1st, 1996 in Seoul and Pusan. It led to an explosion of the structure of the distribution market which was based on department stores for up-market distribution and on traditional markets for down-market distribution.


The Business to Consumer (B to C) market


The improvement of the standard of living over the last few years, with the emergence of the middle class, has generated a considerable expansion of the internal demand. Customs and lifestyles rapidly westernized, especially for new generations, which changed consumption habits. The Korean feels more attracted by foreign trademarks, imported or directly made in Korea trademarks.
This sector has 3 tendencies: first, the fast development of large chains brought about by big foreign groups (Carrefour had 14 shops at the beginning of 2000). Second, a transformation is under process in the department stores sector, gathered around the 4 biggest groups which are Lotte, Hyundai and Shinsegae (the big three) and Samsung Department Store. Third, traditional businesses and local groceries are going downhill and are gradually replaced by franchised trademark shops and managed by big groups of distribution. However, the traditional business still holds a 71% market share. There is a strong imprvement of door-to-door sales, catalogues and telemarketing. Sales via the Internet have been forecasted to grow by 90% a year by 2004.


The Business to Business (B to B) market


It is important to take into account the own peculiarities of the country as regards to the distribution networks and the techniques of sales promotion. For example, numerous intermediaries do intervene in the distribution networks what increases considerably the final prices. The majority of the imports are carried out by commercial intermediaries, either agents or trading companies.




Transportation of goods


By road


South Korea's road network composed of 52,000 km of tarred roads, among which 16,000 km are main roads and 1,900 km are highways. Nevertheless this network remains insufficient and too congested on the main axis of the country (Inchon-Seoul, Pusan-Seoul) and on urban zones. However, important governmental projects of improvement are in progress. Therefore Korea should get 5,100 km of highways and 18,000 km of main roads by 2011.


By rail


Railroad tracks extend over 6,600 km and serve all the country in a vast well organised railroad network. The state owned company Korea National Railroad ( KNR ) manages the whole network. In 1999, trains transported 50 million tons of goods, that is 22.1% of the total transportation. Important projects of development of the network are in process: a line of high-speed train is in progress between Seoul and Pusan, via Taejon and Taegu, the project is scheduled for completion in April 2003 and the trains network will be operational by 2007.


By sea


The Office of ports and sea transports, which was created in 1976, became the Ministry of Maritime Affairs & Fisheries (MOMAF) in 1996 to promote the industry of sea transports. Thanks to the combined efforts of the government and the private sector, the raw tonnage of the Korean fleet reached 8 million barrels in 1997.
The main ports of the country, starting from the most important, are Pusan, Inchon, Tonghae, Masan,Yosu, Kunsan, Mokpo, Pohang, Ulsan and Cheju. The Korean harbour facilities can currently respond to only 68% of the whole demand. Consequently, the government planned to enlarge considerably the available services, to build new ports in Kwangyang, Asan, and on the island of Kadok, as well as new quays in Pusan and Masan.


By air


Korea is close to numerous Asian big cities, and flights are ensured towards all regions in the world. The main international airlines ensure about 800 direct weekly scheduled flights between Seoul and the main cities of North and South America, Europe, North Africa, the Middle East and Asia. For some years, the government invested a lot to improve airport infrastructures, to manage with more efficiency an international air traffic which keeps growing.
Seoul Kimpo's airport ranks 7th in the world in quantity of handled freight (1,700,000 tons in 1999).
The two other international airports of the country are Pusan and Cheju. The construction of an airport on the island of Youngjong, 50 km West of Seoul is in progress. The national airline is Korean Air, which also ensures domestic flights with Asiana Airlines ; the management and regulation authority of the Korean air transport is the Korea Airports Authority.
 


Standards

 


Patents and brands

The register of trademarks and patents is done with the Korea Industrial Property Office (KIPO).
South Korea signed the Agreement of Paris for the Protection of Industrial Property and the Agreement which establishes the World Industrial Property Organisation. As for patents, the country signed the Treaty of Co-operation on Patent ( PCT).
Patents are recorded for 15 years and can benefit from a license of exclusivity. The recording of a trademark is valid for 10 years, and renewable for the same period of time.

Texts currently applying to patents/brands

  Text Date entered into law Period of validity Comment
Trademark   Trademarks Law     Period of validity of 10 years   Renewable period  
Design   Patent Law   On 1997   Initial period of validity de 10 years    



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Last modified in January 2004
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