Korean downtown duty-free shops urged to focus on foreign visitors

Andrew Pentol

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New legislation could force retailers to attract more foreign customers or lose their licences

Duty-free shops in South Korea serving more Koreans than foreigners face possible closure after the Korea Customs Service announced it is revising regulations on downtown duty-free shops.

If the revision takes place retailers wishing to open new duty-free shops will only be able to do so in cities that have achieved a minimum required level of growth in the number of foreign visitors, and provided that over half of the store’s customers are from overseas. Existing businesses will not have their licences renewed unless more than half of their customers in the past five years have been overseas visitors.

Korean retailer Hotel Lotte Duty Free, which operates four downtown and three airport duty-free shops, confirmed the reports and said the move could have a long-term effect on its duty-free business. It said that the move did not reflect the realities of the South Korean market, where growth in outbound tourism is far outstripping that of inbound tourism, and said that the Korean Tourism Organization is appealing against the new regulation.

Lotte assistant manager strategy and planning Shawn Lim told RavenFox.com: “All of our stores have more Koreans than foreign tourists...If we cannot meet the 50% rule we will be unable to open a new shop and extend our licence from 2013.”