[The Editors' Verdict] The Government's Plan to Filter Overseas Direct Purchases

Kyung-ho Lee, Head of Issue & Trend Team

The controversy over overseas direct purchase (direct buying) regulations is the result of falling into the trap of trying to catch two rabbits at once: regulation (direct purchase regulation) and promotion (enhancing corporate competitiveness). Preventing products filled with harmful substances, even if they are not direct purchases, is the government's responsibility and is currently being done. As the volume of direct purchases surged, the priority was to find justification for regulation from the standpoint of strengthening safety measures for the public. However, suddenly, the government enforced mandatory KC certification and claimed to save domestic companies threatened by Chinese platforms like Alteish (Ali, Temu, Shin). Seoul Mayor Oh Se-hoon supported the government on the issue of 'inconvenience or survival.' He said, "The problem is that the government is doing nothing while harmful children's products overflow and 500-won shoulder bags and 600-won necklaces appear, making corporate collapse a reality."

Consumers were shocked by 'Alteish' for two reasons. One was, "Are they selling this at this price (ultra-low price)?" and the other was, "Did they sell this at this price (expensive price)?" They were outraged to see products that looked similar or identical being sold at several times the reasonable margin. Some products were sold by relabeling Chinese goods as Korean-made, a practice known as 'tag-gari.' According to the government's logic, consumers should pay more for now to support domestic companies. The Yoon Seok-yeol administration, which claimed to protect the free market economy, inevitably faces criticism that it is implementing a 'North Korean-style isolationist policy.' Former Reform Party leader Lee Jun-seok said, "It's like turning on a heater and an air conditioner at the same time," calling it "a case of 'yangduguyuk' (hanging a sheep's head but selling dog meat) representing the distribution industry under the pretext of children's product safety issues." Former lawmaker Yoo Seung-min also called it "a foolish policy," saying, "It's like burning down the thatched cottage to catch a bedbug."

A poster promoted by the Ministry of SMEs and Startups regarding direct purchase regulations

Although the government withdrew the measures and the president promised an apology and prevention of recurrence, unease remains. It is said that neither the ruling party nor the government participated in this measure at the party-government meeting. The Presidential Office did not participate in the overseas direct purchase task force (TF) led by the Office for Government Policy Coordination, and this issue was not reported to President Yoon Seok-yeol. People’s Power floor leader Choo Kyung-ho said, "I heard about it for the first time." He added, "When reporting, you should highlight the points like 'what is important and what issues might arise,' not just report plainly and then say 'Wasn't it reported?' That is not proper consultation." They prepared to catch two rabbits but there was no proper policy coordination or political judgment from the start. If they didn’t know, it was incompetence; if they did, it was irresponsibility.

On the 17th, the Ministry of SMEs and Startups posted a promotional poster on its official Facebook account with the phrase "The government filters overseas direct purchases (direct buying)." To convey the meaning of 'filtering,' they included LG Electronics' air purifier product. Along with the poster, related policy leaflets were lined up. These remained even during the height of the direct purchase ban controversy. Then, on the 19th, when the government effectively withdrew the measures, the leaflets disappeared as well. There can be some concessions or 'if not, so be it' type measures. But that is only possible in the early days of administration. Now, it is the third year of the administration.