E-Cigarettes 120,000 Packs Swept Up
Chinese Nationals Arrested for Smuggling to Hong Kong
Price Difference Profit of 150 Million KRW in One Year
30% Discount Code for E-Cigarettes
Frequent Misuse Causes Disputes Between Customers and Store Owners
Top Item for Underage Purchase Issues
Various Incidents and Accidents Cause Headaches
The Seoul Regional Customs Office of the Korea Customs Service recently announced that two Chinese nationals were booked on charges of violating customs laws for smuggling a total of 120,000 packs of heated tobacco products worth approximately 600 million KRW from convenience stores and other retail outlets to Hong Kong. The photo shows a tobacco display at a convenience store in Seoul. Photo by Kim Hyun-min kimhyun81@
[Asia Economy Reporter Seungjin Lee] Tobacco, a best-selling product accounting for more than 40% of convenience store sales. However, recent incidents and accidents surrounding tobacco have been causing headaches for convenience store owners. While domestic tobacco smuggling, which had been quiet for a while, is now rampant, disputes between convenience store owners and customers over the popularity of electronic cigarettes have also continued, leading to various incidents and accidents.
Tobacco Sold at Convenience Stores Caught in Smuggling
According to the convenience store industry on the 11th, last month a notice titled 'Precautions for Abnormal Tobacco Sales' was delivered to convenience stores nationwide. It stated that cases of purchasing large quantities of domestic heated tobacco products and smuggling them overseas had been reported. In fact, the Seoul Regional Customs Office of the Korea Customs Service recently booked two Chinese nationals on charges of violating customs laws for smuggling a total of 120,000 packs (worth about 600 million KRW) of heated tobacco from convenience stores and other retail outlets to Hong Kong.
The suspects went around convenience stores in Yeonhui-dong, Seodaemun-gu, Seoul, purchasing electronic cigarettes and sending them by mail to local sales agents. They bought electronic cigarettes at 4,500 KRW per pack and sold them to the Hong Kong sales agents for 37 Hong Kong dollars (about 5,700 KRW), earning a profit of about 150 million KRW over the past year.
Smuggling domestic tobacco for arbitrage is not a recent phenomenon. According to an industry insider, three years ago, a Chinese international student who was illegally guiding in Korea went around convenience stores in Seoul and swept up all the electronic cigarettes in the stores. The student claimed the large purchase was to give gifts to Chinese tourists, but the industry views this as another case of smuggling domestic tobacco.
An industry official explained, "When sending large quantities by mail, export declarations must be made, so it can be detected by customs authorities, but it is highly likely that smuggling was done by distributing small amounts to tourists and then collecting them again locally." Domestic tobacco smuggling, which had been quiet for a while, seems to be rampant recently due to difficulties in using duty-free shops caused by the COVID-19 pandemic and the limited activities of peddlers.
Although customs authorities have urged convenience store owners to be cautious, responses on the ground remain difficult. Hong (52), who operates a convenience store in Seoul, said, "From the seller's perspective, it is not easy to ask customers why they are buying in large quantities or to stop them," adding, "I worry that I might be unnecessarily dragged to the police station if I am suspected as the source of purchase."
Various Incidents and Accidents: The Ordeal of Tobacco
Incidents and accidents surrounding tobacco are not limited to smuggling. Recently, as electronic cigarettes have gained popularity, related problems have also emerged. Electronic cigarette manufacturers run promotions offering a 30% discount code to first-time buyers, and since only a phone number is required, discount code theft occurs frequently. Customers trying to purchase electronic cigarette devices with discounts often end up in unnecessary disputes when convenience store owners inform them that the discount code has already been used.
An industry insider said, "There are cases where customers repeatedly ask store owners and staff to double-check or accuse the store of wrongdoing," adding, "To verify whether the discount code was stolen, it is necessary to check each customer's phone number, which is practically impossible." Recently, convenience stores have issued notices warning about the surge in discount code theft cases.
Tobacco is also one of the most commonly used items for laundering money from lost or stolen cards. It is easy to purchase at convenience stores, and its high unit price makes it convenient to buy with a card and then convert to cash. In fact, it is known that at various stores nationwide, individuals attempting to purchase large quantities of tobacco using stolen cards are caught once or twice a year.
Mr. Hong said, "Because convenience stores are the main distribution points for tobacco, problems never cease," adding, "Tobacco is the number one item involved in underage purchase issues at convenience stores, and with various incidents continuing, it is like a 'sore spot' for those operating convenience stores."
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