DFS geared to enter Korean duty-free market

DFS Group, the world’s leading duty-free operator, based in Hong Kong, is geared to enter South Korea this year by potentially becoming a supplier to a new duty-free store operated by the Jeju Tourism Organization.

The JTO, scheduled to open a new duty-free shop in Seogwipo, Jejudo Island on Feb. 12, is “examining the option to source in various foreign brands through DFS, which initially made this offer to the JTO,” a JTO official was quoted as saying in the Korea Economic Daily on Tuesday.

Since winning the government-led bid for a license to open a new duty-free store on the island in July 2015, the tourism company had reportedly been facing hurdles in securing major brands to its shop, which as of now could not guarantee steady revenues.

In this context, DFS, which had been eyeing opportunities to enter the Korean market for years, likely made an alluring proposition to the JTO, which is positively reviewing the offer, according to the news report.

Current law dictates a duty-free operator is prohibited from lending its name and operational rights to a second party. There are no clauses banning external sourcing, meaning it is legal for JTO to bring in diverse brands and products through an outside actor -- DFS.

The JTO reportedly has yet to reach a final decision on whether it will directly secure foreign brands to its duty-free shop or whether it will partially source in products from diverse brands through DFS.

Industry watchers expect the JTO will most likely go with the second option, as it has yet to secure enough brands to its duty-free store, which only has around a month left until its announced opening.

By Sohn Ji-young and news reports (jys@heraldcorp.com)