How to export to South Korea

The trade dynamics between Thailand and South Korea have experienced remarkable evolution over the years. As a testament to this flourishing relationship, key export products from Thailand to South Korea include sugar, oil, rubber products, electronic circuits, aluminium products, and various food and beverage items. In 2022, exports from Thailand to South Korea boasted an impressive US$4.5 billion, according to official statistics reported in The Bangkok Post, positioning South Korea as Thailand's 12th largest trading partner.

But what's behind this robust growth in trade relations? The foundation can be traced back to the ASEAN-Korea Free Trade Agreement (AKFTA) inked in 2005. This landmark agreement was instrumental in eliminating tariffs on nearly all products traded between the two nations. Thailand inked its second Memorandum of Understanding (MoU) with South Korea's Gyeonggi province in September 2022 to further solidify their collaboration, following the footsteps of a similar mini FTA with Busan earlier.

With such a strong trade foundation, it's crucial for Thai businesses to understand the nuances of shipping to the Korean market. The intricacies of exporting to South Korea involve a myriad of processes and regulations. This blog aims to equip Thai businesses with insights and guidelines on ensuring smooth and successful shipments to South Korea.

Navigating the export maze: Key aspects of shipping to South Korea

In the following section, we offer a strategic roadmap to guide Thai exporters through the intricate maze of exporting to South Korea, ensuring that your venture is smooth and profitable.

Identifying the right products

Understanding the South Korean consumer's mindset, values, and preferences is essential. This could involve evaluating trends, consumer reports, and even considering cultural factors. For example, South Korea's growing interest in organic and natural products can be a potential niche for Thai exporters specialising in these areas.

Understanding trade tariffs and barriers

Navigating the South Korean market also involves understanding its economic nuances. The key among these is the AKFTA and its implications for tariffs and trade barriers. While this landmark agreement has significantly reduced many tariffs, positioning Thai products more favourably in the South Korean market; however, it's not an all-encompassing shield; some tariffs persist. Businesses must assess whether their product lineup will gain from AKFTA's provisions or face extra tariffs.

Delineating South Korea's tariff system:

1. General customs tariff

Thai businesses should be aware of the General Customs Tariff when exporting goods to South Korea. This tariff type pertains to items not encompassed by the other specific tariff classifications discussed below. It mandates that any product entering South Korea under this bracket be subjected to all relevant duties and taxes.

2. Preferential tariff

South Korea extends preferential tariffs to nations, including Thailand, that have forged an FTA with them. Within this tariff category, goods enjoy different treatment based on their FTA stipulations:

Immediate tariff reduction: Once the FTA is activated, these goods receive an instantaneous tariff waiver.

Staging reduction: Tariffs decline progressively over an agreed-upon duration for these items.

Non-scheduled products with a fixed duty rate: Some products fall outside the purview of the staging reduction, making them liable to a consistent duty rate.

Taking a closer look at the AKFTA, we find that goods exported from Thailand, a member of ASEAN, are further distributed among three classifications:

Normal track: Goods under this designation are treated with zero tariffs.

Sensitive list: These goods have tariffs that will methodically diminish over a certain time frame.

Highly sensitive list: The tariffs imposed on this category of goods stand firm without any projected alterations.

3. Reciprocal tariff

An interesting provision in South Korea's tariff system is the reciprocal tariff. This mechanism is exclusively relevant to nations bound by the AKFTA. For instance, if Thailand, having an FTA with South Korea, exports a product that maintains its high or non-scheduled duty rate, South Korea reciprocates by applying an identical tariff.

Additional duties and import tax

When contemplating how to export to South Korea, businesses must account for more than just tariffs. The product's value determines the payable duties, identified through the Harmonised System (HS) code. This classification system aids customs in applying suitable duties. South Korea's average import duty stands at 8% of the goods' value, but items like seafood, clothing, and tobacco may attract varied rates.

Moreover, all imports into South Korea face a standard 10% Value Added Tax (VAT). To put it simply, it's a consumption tax levied at every production phase. Some luxury and durable consumer goods also draw an excise duty of 10% to 20%. Notably, alcoholic beverages like beer endure a hefty 72% liquor tax per litre.

Navigating Thailand's export process

Before tapping into the lucrative South Korean market, Thai businesses must be well-versed in their home-ground export procedures:

• E-customs system registration: This initial step involves a one-time import and export registration.
• Review of controlled goods: Here, goods are classified based on the need for an export permit and categorised according to documentation requirements.
• Submission and verification: The necessary documents are submitted to the e-Customs system for verification.
• Duty payments: While many items are zero-rated, certain specific goods do attract export duties.
• Inspection and cargo release: The e-Customs system guides the inspection based on the categorisation of shipments.

Finding out the prohibited and restricted goods

Equally essential is the awareness of off-limits items. In Thailand, exporting a wide range of items like narcotics, fake currency, and goods with an improper Thai flag design is strictly prohibited. Others, such as firearms, demand special permissions. Additionally, remember the currency restrictions if you're moving a considerable amount of Thai Baht.

On the South Korean front, you may view a summary below:

Prohibited goods in South Korea

Goods you cannot export to South Korea include:

• Counterfeit foods, including forged money
• Books or other media with content that violates constitutional orders and harms the public
• Confidential information or intelligence materials
• Illegal narcotics

Restricted goods in South Korea

You will need permissions or licences from relevant South Korean authorities before shipping goods like:

• Weapons including guns, swords, gunpowders and explosives
• Products made from animals listed under the Convention on International Trade in Endangered Species (CITES)
• Animal products, including meat, fur and skin
• Precious metals
• Plants, fruits and vegetables

The importance of partnering with the right logistics firm

Navigating the complexities of international shipping, especially to a country with stringent regulations like South Korea, requires more than just understanding customs procedures. While awareness of these regulations is undeniably crucial, there's another component that's equally essential: partnering with a dependable logistics provider. These professionals do more than merely oversee the export of your parcels to South Korea. They act as your guide, ensuring that every step of the shipping process is in full compliance with the customs regulations of both your home country and South Korea.

As you venture deeper into the shipping process, the first hurdle you'll encounter is the documentation. And here, the expertise of a reliable logistics partner becomes invaluable.

Essential documents for shipping to South Korea

In the vast arena of overseas shipping, having the right documents at one's fingertips is a hallmark of preparedness. For instance, when you partner with DHL Express, you’ll be provided with standardised customs services to support your overall customs clearance process, including a list of necessary shipping documents like:

• Air waybill
• Bill of lading
• Commercial and customs invoices
• Packing lists
• Datasheets
• KC license

The South Korean Customs Department, known for its thoroughness, leaves no stone unturned. A proactive step to fast-track your entry through this checkpoint involves uploading these crucial documents to UNIPASS, Korea’s primary customs interface.

Navigating South Korea’s customs clearance

The moment your parcel lands in South Korea, it's ushered into a rigorous screening phase. Here, customs officers meticulously sift through your customs declaration documents, verifying product descriptions, market values, quantities, weight measurements, certificates of origin, and more. In the event of mismatches or discrepancies, there's a loop of corrections and verifications to ensure every parcel aligns with the country’s customs standards. This process is a testament to South Korea's commitment to ensuring only authentic shipments pass through its borders.

Minimising delays and avoiding penalties

In the realm of shipping, minor documentation missteps can trigger significant delays or result in confiscations. Unaccounted declarations may attract substantial fines. The cornerstone of a successful shipment is thorough documentation combined with transparent interactions with South Korea’s customs clearance. Strict compliance can ensure timely deliveries and mitigate potential hold-ups.

Conclusively, once you’ve done your paperwork, the next step is a crucial one — packaging. Ensuring your goods are packed securely is more than just a precaution; it's a commitment to the integrity of your products. As they navigate bustling air routes, and meander through intricate road networks across continents, the right packaging acts as their first line of defence. Not only does it shield items from external damages like impacts or environmental factors, but it also reinforces their stability, minimising the risks of internal movement or jostling. Moreover, well-packed goods send a message of professionalism and care to the recipient, reinforcing the trustworthiness of your brand or service. In the end, the journey of your products, safeguarded by robust packaging, becomes a testament to your dedication to quality and customer satisfaction. Ensuring your goods are packed securely guarantees their safety as they journey across continents.

Partnering with the best: why DHL Express stands out