Sales Distribution Channel,Taxes, Quota, Tariffs In Korean Seafood

1129 words - 5 pages

Sales distribution channelsLocal representation is essential for the success of foreign firms in the Korean market. This is especially true when considering the fact that in Korea, business relationships are built upon personal ties and social introductions, and that much of the major third-country competition is only a few flight-hours away. In addition, for sectors that involve any type of government procurement, an entity must be registered with the Korean government in order to bid on the procurement projects. Hence, many American firms enter into a consortium with a Korean company or enter into a representative agreement, especially for the purposes of market entry. Finally, the language barrier and established social/ business circles make it extremely difficult to enter the Korean market without a qualified Korean representative.Distribution methods and the number and functions of intermediaries vary widely by product area and local conditions. The market for most consumer products is concentrated in major cities. Retail distribution is accomplished through a highly complex network, the majority of which are small family-run stores, stalls in markets, and street vendors, though this traditional distribution method is changing rapidly toward large-sized discount stores. There are many large retail stores in the major cities, especially Seoul, Daegu, Busan, and their outer-lying suburbs. This distribution channel is one of the best ways to market foreign products to Korean consumers. Recently, retailing concepts such as Full-Line Discount Stores (FDS) including Price Costco (USA), Wal-Mart (USA), Carrefour (France), and E-mart (Korea) have gained tremendous popularity in Korea. Rapid expansion of these discount chain stores is planned nationwide, with suburban satellite cities attracting the greatest number of stores.In November 1995, regulations from the Korean Ministry of Finance and Economy (MOFE) went into effect, which allowed the legal entry of parallel imports. Prior to this legislation, distribution was disciplined with exclusive distributor/agents agreements. Besides an authorized and registered distributor/agent, no other importer could legally clear goods through Korean customs. As a result, importers that were not the exclusive distributor/agent found their shipments frequently held up at customs.The effect of parallel imports is to marginally reduce the value of an exclusive distribution agreement. Many American companies continue to give exclusives, since they have in place territorial limits in neighboring countries that enhance the value of the exclusive in any one country. Likewise, any parallel importer in Korea that is not receiving the support of the OEM, and does not deal in the same volume, cannot be guaranteed a steady source of supply. As noted above, the legitimate exclusive distributor still has considerable advantages in Korea.200120022003 (E)2004 (P)($000)($000)($000)($000)A. Total Market...

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