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The prices of vitamins, flour, gasoline, diesel fuel, LPG and imported cars are much higher in Korea than in the U.S., according to data released by the Korea Consumer Agency Tuesday. The survey compared prices of 11 daily necessities in 12 cities in 11 countries (New York, London, Frankfurt, Paris, Tokyo, Milan, Toronto, Taipei, Singapore, Beijing, and Hong Kong).
Of the 11 products, foreign cars, gas, diesel, flour, detergent and imported vitamins were more expensive in Korea than elsewhere, in terms of purchasing power parity. With the price of foreign cars sold at home set at 100 on a PPP index, the prices in other countries were less than half (Canada 51.2, Italy 50.4, U.S. 44.8, France 43.1, Germany 42.8, Japan 40.5). It was a similar case for gas and detergent. The higher price tag of foreign cars in Korea is due to tariffs and various taxes. In the case of gasoline, the comparative PPPs were France 64.7, U.K. 63.6, Japan and Italy 51.3, U.S. 43.8, Germany 42.9 and Canada 40.8. For detergent they were U.S. 66.0, France 65.6, Germany 58.1, Japan 55.5, U.K. 54.2, Canada 49.3 and Italy 39.6. Imported vitamins also cost three to five times more in Korea (U.S. 20.1, Canada 38.8).
According to the agency, each of the 11 products has been penalized (with fines, price corrections or heavier penalties) for price fixing or unfair trading by the Fair Trade Commission in the past two years, yet their prices are still very high.
The agency said high vitamin prices are due to large distribution margins added by dominating importers. For instance, foreign vitamins that sell for W26,000 (US$1=W1,047) in Korea are imported for 20 to 25 percent of that price, around W5200 to W6500. Some W14,300 to W18,200 (55 to 70 percent) is added as profit margin for the importers and distributors and W2,600 to W5,200 (10 to 20 percent) as profit for drugstores. Also behind the high prices is the fact that vitamins are sold only at pharmacies in Korea, the agency said, while in other places such as the U.S., Canada and Hong Kong they can also be bought at supermarkets.
Meanwhile the washing detergent market in Korea is essentially an oligopoly, 90 percent controlled by just four companies. They have a very strong say in determining prices and can easily transfer the burden of rising raw material prices to consumers, which is regarded as one of the main reasons behind the price gap between Korea and other countries.
(englishnews@chosun.com )
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