Relief for South Korean retailers as Customs modifies overseas visitors rule

Downtown duty-free shops in South Korea have been served a marginal reprieve from proposed legislation requiring shops to serve a minimum number of overseas visitors in order to get their duty-free licenses extended. The Korea Customs Service had originally proposed that at least 50% of customers should be non-Koreans. It has has now reduced that figure to 30% according to some Korean retailers and 35% according to others.

The figure, which must be calculated over a five-year period, is more in line with the number of overseas visitors to South Korea. Previously retailers had voiced concerns that they would be unable to meet the 50% requirement.

Under the same legislation, retailers wishing to open new downtown stores will only be able to do so in cities that have achieved a minimum growth of 300,000 foreign visitors over the past five years, and provided that more than half of the store’s customers will be overseas visitors. DFNIonline understands the new regulation came into effect earlier this year.

Korean retailer Hotel Lotte Duty Free, which operates four downtown duty-free shops, suggested that it could still be difficult for Korean retailers to secure licence extensions. Lotte assistant manager strategy and planning Shawn Lim told DFNIonline: “We are doing our best to increase the number of foreign customers visiting our shops and the number of overseas customers making purchases, but it is not easy as the Korean tourism market is not doing well.  We have several branches in Japan which is our main foreign market and are trying to promote several tour packages which include visits to our shops.”