Assemblyman Jo O-seop: "JDC Duty-Free Shop, Difficult for Small Businesses to Enter and Easy to Be Expelled"

[Asia Economy Honam Reporting Headquarters Reporter Yoon Jamin] The Jeju Free International City Development Center (hereinafter JDC) has been criticized for having a discriminatory structure in its designated duty-free shops, where small and medium-sized enterprises (SMEs) struggle to enter and are easily pushed out.

Moreover, it has been revealed that the operation of the online duty-free shop is blocking sales channels for SMEs and negatively affecting their sales.

On the 19th, Assemblyman Jo O-seop (Democratic Party of Korea, Gwangju Buk-gu Gap) stated, “The first evaluation criterion for the entry proposal item in the proposal submitted by hopeful companies when entering the JDC duty-free shop is the monthly target sales amount, which is an inappropriate standard for comparison between large corporations and SMEs, yet it is still being applied.”

Among 184 SMEs that applied to enter the duty-free shop from 2015 until the end of last month, only 20 domestic SMEs succeeded in entering, accounting for just 10.8%.

On the other hand, JDC has made it easier to expel SMEs.

According to Article 6 of the ‘Entry and Expulsion Guidelines,’ regular expulsion is determined based on sales performance in the first and second half of the year.

Since expulsion is decided solely on sales performance rather than evaluating the actual management performance of the entrants through net profit, SMEs, which generally have smaller total sales compared to large corporations, cannot survive, highlighting a discriminatory structure.

Additionally, JDC limits the items handled in the online duty-free shop to those displayed in physical stores, blocking opportunities for SMEs to expand their sales channels, resulting in stagnant growth rates for online duty-free shop sales.

Compared to total domestic duty-free shop sales, online duty-free shop sales were 1.4871 trillion KRW (16.1%) in 2015, 2.3642 trillion KRW (19.2%) in 2016, 3.0442 trillion KRW (21.0%) in 2017, 4.3388 trillion KRW (22.8%) in 2018, and 3.3376 trillion KRW in the first half of 2019, with estimated year-end sales reaching 6.6752 trillion KRW (26.8%).

However, JDC’s figures were only 10.3 billion KRW (2.1%) in 2015, 11.0 billion KRW (2.0%) in 2016, 12.1 billion KRW (2.2%) in 2017, 11.8 billion KRW (2.2%) in 2018, and 14.6 billion KRW (2.8%) in 2019, remaining in the 2% range.

While domestic private duty-free shops have rapidly grown over five years by handling various SME brands not displayed in stores through online duty-free shops to overcome spatial limitations, JDC has only sold products displayed in stores online, resulting in growth rates stuck in the 2% range.

Furthermore, the lack of online payment services, which are commonly operated by most online retailers, forces users to come directly to the Jeju Airport domestic departure terminal, causing inconvenience and raising concerns about the decline in service quality of the online duty-free shop.

Assemblyman Jo said, “JDC, established to develop Jeju Island as an international free city, enjoys the privilege of operating designated duty-free shops for domestic customers while discriminating against SMEs in entry and expulsion. The discriminatory evaluation criteria focused on sales amount must be improved, and measures to expand sales channels for SMEs through revitalizing the online duty-free shop should be prepared.”

Meanwhile, entry into the JDC duty-free shop is decided by submitting a proposal and ranking by high scores based on the evaluation of the Duty-Free Shop Operation Committee according to the ‘JDC Designated Duty-Free Shop Entry and Expulsion Guidelines.’

This content was produced with the assistance of AI translation services.