Thursday, November 10, 2011

Consumer Goods in Korea Most Expensive in the World

Consumer prices in Korea remain among the highest in the world. According to Consumers Korea on Tuesday, the retail prices of 48 items from electronics to food in Korea were higher than in any of the 17 countries surveyed. The countries included the U.S., the U.K., Japan, China, India and the Philippines.

Consumers Korea compared the final retail prices of products of leading global brands in major cities from Aug. 11 until Sept. 5. The data was collected jointly by local consumer organizations and Consumers Korea researchers in these countries. The prices from department stores, superstores and ordinary supermarkets were taken, averaged, and converted to Korean won.

◆ Korean TVs More Expensive in Korea

Even Korean-made goods are often considerably cheaper abroad. Samsung's 46-inch LED

TV D6400 is priced at W2.91 million (US$1=W1,121) at home, considerably more than W2.16 million in the U.S., W2.3 million in Malaysia, and W2.39 million in Germany and France. Compared to W1.72 million in China, where it was the cheapest, Korean consumers have to pay a whopping W1.19 million more.

The situation is similar with LG Electronics. Its 47-inch LED TV LW5700 costs W2.64 million in Korea, compared to W2.35 million in the U.K., W2.3 million in Australia, W2.04 million in the U.S., and W1.69 million in China.

Smartphones are also pricier in Korea. Samsung's Nexus S, which was launched last year, is sold for W700,000 in Korea, but W630,000 in the U.S.

In the past, it was a widespread strategy among Korean companies to maximize profits at home and expand their bases in overseas market by selling goods cheaply there. But consumers feel that must end now that the big conglomerates make trillions of profits every year. The reason Samsung and LG can get away with exorbitant prices here is that they can occupy over 95 percent of the market share.

A Samsung spokesman denied the findings, saying the D6400 model was sold for W2.2 million at E-Mart in August, but Consumers Korea listed it as W2.91 million. He added that it is on sale at W2.23 million at the moment. LG Electronics also insisted that the price listed by the Consumers Korea is over W600,000 higher than the actual price in superstores here.

LG also claims goods sold in the Korean market have higher prime costs because the materials used are superior and the price includes delivery and installation costs.

◆ Korean Consumers at Disadvantage

The price of jeans, shampoo, beer and sun screen in Korea is also among the top five. A pair of Levis 501 jeans cost W168,000 in Korea, second only to W195,585 in Japan. The same jeans cost W71,394 in the U.S.

P&G's Pantene Pro-V shampoo, at W11,140, and Australian beef sirloin, at W49,800 per kilo, are also the second most expensive in Korea following Japan. Consumers Korea said, "The reason for the high price of imported beef is the unreasonable logistics and distribution structure here where middlemen take a huge profit." It said many Korean consumers are disadvantaged because they find it difficult to obtain accurate price information.

It said electronics retailers set the price high and then lower it to more reasonable levels with condescending "special offers."

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