Korea duty-free cosmetics concerns: New labelling system to prevent illegal re-selling

According to the official statement issued by the Korea Custom Service (KCS), this measure is already in place.

This month, Amorepacific and LG Household and Healthcare (LG H&H) will begin to tag their duty-free products with the labels.

The agency explained that it began with products from these companies because they account for 80% of all duty-free cosmetic purchases.

KCS added that it plans to recommend printing methods and stickers to companies to support the new labelling system.

Curbing illegal distribution

KCS stated that the option of having duty-free good delivered to foreigners has raised concerns that it has made it easier to distribute duty-free goods illegally.

Instead of banning deliveries, which may affect sales, and particularly hit small and medium enterprises (SMEs), a labelling system stood out as the best option.

Currently, if an individual is caught abusing delivery services to illegally resell products, KCS can restrict the individual’s right to have duty-free products delivered.

KCS added that if illegally circulated goods are found, it would not hesitate to take strong measures.

Additionally, the KCS has formed a joint public-private control team with duty-free retailers, cosmetic industry players and custom officials to crackdown on illegal the distribution and circulation of duty-free cosmetics.

With the implementation of the labelling system, KCS said it will continue to monitor the new measures and its effects on the duty-free market. It stressed that it would enforce stronger measures if necessary.

Double-edged sword

The booming travel retail market has been a double-edged sword for South Korea.

While it has created a flourishing channel for cosmetic companies, it has also created an unofficial reselling market, such as the diagou channel in China.

South Korea’s beauty industry has been particularly been affected due to the popularity of its products.

In 2016, KCS implemented rules to limit foreigners from buying up to 50 cosmetics and perfumes from a single brand.

This caused the industry to worry that strict regulations would affect its sales. However. the illegal distribution of duty-free goods has raised various concerns.

A report by Korean media outlet Aju stated that unscrupulous distributors could easily mix authentic duty-free goods with adulterated copies.

Additionally, the widespread availability of products in the market could lead to lower prices and take away tourist motivation to visit Korea.