Customs Considerations In Exporting to South Korea
Manufacturers looking to export their products abroad need to consider various factors when evaluating export markets. One of those factors is the customs clearance infrastructure and processes within a given country. This article presents an overview of the time and cost it takes for a local partner to clear imported products through customs in South Korea. This overview, along with a regional comparison, should help you better qualify South Korea as an export market for your products.
South Korea is located within the East Asia & Pacific region. It is a densely populated country with roughly 51 million people as of 2018. 81% of the population lives in urban areas. The World Bank categorizes it as a high income country with a GDP per capita (PPP) of USD $39,400 per person.
The "World Bank's Doing Business project" publishes an evaluation of countries based on their efficiency of cross border trade. When assessing import efficiency within a country it primarily reviews four factors:
1. The time for border compliance (imports): Compliance time associated with the country's customs regulations, inspections and handling that takes place at its port or border. Assumes a US$50,000 imported shipment of auto parts weighing 15 tons for calculation purposes.
2. The cost of border compliance (imports): Compliance cost associated with the country's customs regulations, inspections and handling that takes place at its port or border. Assumes a US$50,000 imported shipment of auto parts weighing 15 tons for calculation purposes.
3. The time for document compliance (imports): The time for obtaining documents, preparing documents, processing documents, presenting documents and submitting documents. Assumes a US$50,000 imported shipment of auto parts weighing 15 tons for calculation purposes.
4. The cost of document compliance (imports): The cost for obtaining documents, preparing documents, processing documents, presenting documents and submitting documents. Assumes a US$50,000 imported shipment of auto parts weighing 15 tons for calculation purposes.
When evaluating border compliance time and cost amongst major regional economies, South Korea ranks 1st regionally in terms of border compliance time and 5th regionally in terms of border compliance cost. A US$50,000 imported shipment of auto parts would take 6 hours to clear border customs and cost roughly US$315.
|Country||Border Compliance Time (Hours)||Border Compliance Cost (USD)|
When evaluating document compliance time and cost amongst major regional economies, South Korea ranks 1st regionally in terms of document compliance time and 1st regionally in terms of document compliance cost. A US$50,000 imported shipment of auto parts would take 1 hour in South Korea to have documents prepared & cleared and would cost roughly US$27.
|Country||Document Compliance Time (Hours)||Document Compliance Cost (USD)|
Detail for Border Compliance Time and Cost
Border compliance time and cost are calculated as a function of three driving factors: the time/cost related to working with customs authorities, the time/cost related to working with other agencies and finally border handling time/cost. The border compliance time and cost for South Korea are primarily driven by border handing.
|Detail Type||Time (Hours)||Cost (USD)|
|Working with Custom Authorities||1||$37|
|Working with Other Agencies||0||$0|
Detail of Document Compliance Time and Cost
Document compliance time and cost is a function of the various documents required by the country when importing goods. For South Korea, the documents required when importing goods from abroad include a bill of lading, delivery order, customs import declaration and SOLAS certificate.
Another factor that influences import trade efficiency is transportation costs. For shipments bound to Seoul, the port where goods would most likely land would be Busan port. When calculating transportation cost for the US$50,000 auto parts shipment, the World Bank calculates that the shipment that would land at Busan port would need to be transported 401 km with an average travel time of 7 hours. This brings the delivery transportation cost for the shipment to roughly US$568.
Greater use of technology within the customs clearance process helps improve efficiency and lower time and cost associated with customs clearance. Today many countries use digital systems to streamline the customs clearance process. Many of these customs systems are known as EDI or Electronic Data Interchange systems. More recently however, there has been a push to develop even more integrated customs clearance systems known as SW or single window systems. These systems provide greater integration within a given country and between multiple countries when managing customs clearance.
South Korea does have an EDI system known as UNIPASS. It also has an operating SW system known as uTradeHub. More information about this new system can be found at https://www.utradehub.or.kr/porgw/english/html/eng_about_01.html.