Dear Mr. Chung,
The Joong Ang Daily newspaper reported today that the Korea Fair Trade Commission (KFTC) will open an inquiry into the prices of thirty commonly-used consumer items which are generally more expensive in South Korea than in other countries. While I, too, am curious about why each of these items is more pricey in South Korea, I am particularly keen to hear of your findings regarding the price of beer in the local market.
As Andray Abrahamian reported in 10 Magazine late last year, South Korea maintains a 30% tariff on imported beer, canned or otherwise (compared with 1% in the United States, and no tariff in China, Australia and the EU). Such trade barriers, of course, raise the price not only of imported beer but also of locally-produced beer, as the tariff provides cover for domestic breweries to charge higher prices. In addition, such import duties reduce the competitive pressures on local breweries to improve their product.
In the same story, Abrahamian details a few of the numerous restrictions on microbreweries, such as the difficulties faced in obtaining a license for a small-scale brewery. Moreover, microbreweries are not legally able to bottle their beer for off-site sales, such as in a supermarket. As with import tariffs, these restrictions nourish the market dominance currently enjoyed by the big breweries, namely Hite and OB, by crippling would-be competitors.
In light of the KFTC’s vow to enforce competition laws and protect consumers, I applaud your decision to look into the high prices that characterize the South Korean market. I trust you will find the current, government-mandated restrictions on the beer market to be of great interest in your investigation.
Sincerely,
Aaron McKenzie
Seoul
