Inbound South Korea

South Korea Market overview

• South Korea has a population of 50 million inhabitants

• 29.2 million buy online & 71,1% of internet users

• They have spent $10.2 billion in 2014 a 16% increase since 2012.

• The proportion of online shopping to total retail sales in South Korea was 10.9% in 2013, up from 9.7% in 2012.

• The average order value is 98 KRW (89$)

• 2012 free-trade agreement between the USA and South Korea, under which the total value of goods that can be imported free of taxes was established at USD 200

• Products are significantly cheaper overseas, therefore cross-border ecommerce is exploding; imports through ecommerce grew 47% in 2013

The top 3 categories

“Cross-border online shopping in South Korea peaks during the Thanksgiving Day weekend, especially on the Black

Friday, in the USA”1

23

Apparel

Consumer Electronics

Media Products

The top 3 countries they buy from

12

3

US

China

Germany

*Based on the Global Cross Border B2C E-commerce Report 2014 by Ystats.com

North

Korea

South

Korea

Highlights of our delivery service to KR

• Delivery via a network of trusted local partners

• One injection point into South Korea (via Seoul)

• DDP service, our partner perform customs clearance and delivery into South Korea

• Full tracking from origin including pickup, customs clearance and end-delivery

• Delivery service at home with proof of delivery (scan) with 2 delivery attempts and leave a card, call to arrange delivery or pickup from local depot CJ

• Covering KR in between 5 -8 days from US, EU, Asia, AU for main cities

• Final mile delivery in KR from 1-4 days (longer if no customer data provided)

• Maximum weight : : 66 lbs (30kg) and parcel size : length/height is maximum 63 inch* (160 cm*)

*Deviation of these features as well as shorter transit times can be offered through another services. Surcharge applicable if not applying maximum sizes listed

Special requirements for customs clearance into KR

!

Restrictions on import of Natural Health Products shipped to South Korea

• A maximum of 6 bottles and some natural health products has  prohibition ingredient from South Korea e.g. Megaman, Megawomen, ..

Additional information which can assist to perform customs clearance and delivery into South Korea

• Highly recommended to include all the contact details of the shopper: phone number and preferable the mobile number since in case the driver cannot find the address or an invalid address, our partner will contact the addressee by phone

• Required to provide the consignee and address information in Korean Language

• Tax ID is required for all items to perform custom clearance. We advice to always provide this individual personal number (kind of social number) and made this mandatory although only requested officially for a value of $135 or ingestible or supplement goods.

Operational flow to deliver into KR

Step Description Transit

1 Buyer places order online Day 0

2We pick up parcels in your facility or you drop at our facility. We consolidate and

prepare for delivery to KRDay 1

3 Airlift parcels into Seoul and our partner

perform customs clearance

US: 1-2 daysEU: 2 days

Asia: 1-2 daysAU: 1-2 days

4Parcels are injected into KR partner networks for delivery within KR*

1-4 days

Transit times for shipping to KRvia LAX or CMH (West/East)

1 - 2 day3 days>3 days

Final Mile KR Delivery(main cities)

Transport to KR*From US: 1 - 2 daysFrom EU: 2 daysFrom Asia: 1 - 2 daysFrom AU: 1 - 2 days

E2E transit times to KRFrom US: 4 - 7 daysFrom EU: 5 - 8 daysFrom Asia: 4 - 7 daysFrom AU: 4 - 7days

*start from LG facility – 1 extra day for handling

Seoul

Injectionvia

(LAX/CMH)

Appendix

Customs & import restrictions informationWhat tax statuses are allowed for Korea, is it just the standard rate?  Is everything 10% if over the threshold, or are some goods there a tax exempt or have a reduced rate?• Basic tax rate - 7% ~ 13% + VAT• Perfume, cigarette, alcoholic, honey, etc. this is all over 40% value from

invoice• Some of USA made products are taxed only 10% from FTA agreement e.g.

Ipad take VAT ( value added tax ) 10% only