Havocscope, the online database of black market activities ranks South Korea #9 in the world with a counterfeit market worth $14.2 billion, ahead of such countries as Italy, France and India. The counterfeit auto parts’ industry in South Korea is worth $200 million and pirated movies a whopping $1 billion!

Of course South Korea’s geographical proximity to China greatly affects the amount of counterfeits the country is inadvertently receiving. A study conducted back in 2007 by Spire Research and Consulting revealed that in Asia alone, counterfeit products made up between 10% and 25% of unit sales in four key industries - luxury goods, automotive, pharmaceuticals and IT, with between 13% and 28% of profits lost as a result. Naturally, this level of counterfeiting within Asia has had negative impact on export levels of neighbouring countries such as South Korea.

According to the Korea International Trade Association, counterfeit products made in China alone cost South Korean firms US$14.2 billion, equivalent to five percent of total exports. Sophisticated counterfeiting methods used to manufacture Chinese electrical products have had severely negative impact on South Korean export figures of such items as MP3 players, mobile phones and home appliances.

There has been fallout in other areas too; in 2007 one of the largest South Korean food and feed makers, CJ Foods recalled 42 tons of wheat gluten from China. This was in the aftermath of the global pet food scare, when hundreds of cats and dogs began dying from kidney failure after eating food contaminated with wheat gluten that contained melamine, an industrial chemical used to make plastics and fertilizer. Two Chinese companies were suspected of intentionally mixing melamine, an industrial chemical, in with wheat flour to artificially increase protein readings.

Counterfeit apparel is also making its way across the border to South Korea from China. A recent article for thanede risk consulting company Kroll entitled ‘Chinese Fakes in Korean Market’, investigated this phenomenon and uncovered smuggling routes from Northern China into South Korea, with smugglers posing as passengers on ferries from Dalian to Inchon. Cargo agents, based near Dalian, were found to be assisting with visas and shipping arrangements. The investigators even spoke with vendors of counterfeit garments, nearly all of whom denied that the items they sold were Chinese-made. However no details of any factories in Korea could be gle and the investigators ultimately decided that the clothing did indeed emanate from China: “One vendor at Namdaemun, selling soccer uniforms, did admit that he bought them from a Chinese factory and then had them modified. It is easy to buy, or even custom order, “Made in Korea” tags and sew them onto imported garments.”

But South Korea is giving as well as receiving and its home-grown counterfeiting industry has the dubious reputation of producing excellent copies, ironically based on its good reputation for great dexterity in traditional handicraft products: "market vendors throughout Asia seem to agree that the best fake handbags are manufactured in South Korea." (Korean News Wire, October 2007). Counterfeit leather accessories such as bags, belts and wallets are big business and a steady flow of so-called ‘super fakes’ has been making its way out of South Korea for quite a while now. These super fakes are so good that even the brand owners themselves can’t spot them and have been known to inadvertently take them in for repairs under non-existent warranties.

Although South Korea is by no means the biggest producer of counterfeit handbags and wallets (that prize goes to China), it is by far the biggest producer of super copies. One conservative estimate back in 2002 put South Korea’s production of these kinds of counterfeits at about 1 million copies a year.

Software piracy is another industry that is thriving in South Korea and the government has come under fire recently for simply not doing enough to deter this, the biggest embarrassment being that public servants have themselves been found to be among the biggest customers for unauthorized copies: “According to figures from the Korea Copyright Commission, public organizations were cited more than 2,600 times through August this year for using pirated software.” (Korea Times, September 2010). This kind of public humiliation has possibly been partly responsible for fuelling the government’s commitment to the controversial Anti-Counterfeiting Trade Agreement (ACTA), which will criminalise any kind of file sharing.

Current legislation and action against the counterfeiters
Within music piracy great efforts have recently been made to tighten the copyright laws. The model of the “three strikes” laws subsequently adopted in France and Britain was introduced in 2009, with the “third strike” resulting in the broadband connection being cut. Results from this new approach are already positive with the figures from the South Korean branch of the International Federation of the Phonographic Industry (IFPI) reflecting an increase in music sales of more than 10% in 2009, to $159m.

Traditionally South Korean punitive measures for dealing with the counterfeiters themselves have been extremely weak; the maximum sentence being only one year in prison and little chance of even this being implemented. It will be interesting to see if South Korea’s signing of ACTA will have any impact on this. The profits to be made out of super fake’s counterfeiting are significant so clearly this level of punishment has just not been enough to deter the counterfeiters. And it is notoriously easy to purchase a ‘super fake’, just out on the main street in broad daylight.

The Internet is also providing South Korean counterfeiters with an excellent means to peddle their wares. There are hundreds of dodgy websites selling counterfeit luxury items at rock bottom prices compared to the genuine items. Enticing adverts pop-up if you surf using a Korean search engine and if you do a search for a luxury brand you are more likely to come up with a website offering counterfeits than the brand owner’s official site.

A recent article in the Korea Times highlighted the issue of online counterfeit sales and the “globalized counterfeiting chain” that is now emanating from South Korea. Apparently the websites are usually in Korean, obviously targeting Korean consumers, but the servers are based in Hong Kong and China, making it hard for authorities to track them down and force their closure. Legitimate online market places have also had problems with fake designer goods. These websites have been trying to combat this by working with luxury brands on a system where they can report suspected sellers of fake luxury items. After an investigation, the sellers’ accounts can be deleted from the website but as Tom Duke, director of the European Chamber of Commerce in Korea (EUCCK), points out to the Korea Times “the problem is you have the hard core on the sites, the people who can keep coming back and re-registering on the same site with different IDs, which technically should not happen, but it does.’’

The attitude of the man/woman on the street also needs to change for South Korea to get to grips with its counterfeiting problem. Attitudes apparently vary between counterfeiting being viewed as a victimless crime to it ultimately being seen as good for the brand owners because they get free advertising. The fact that counterfeiting contributes to organized crime networks and has negative impact on South Korea’s economy in terms of reduced imports - not to mention a poor reputation globally – is hard to get across to the average consumer here.

Intellectual property rights are undergoing close scrutiny in South Korea but in addition to a severe shake up of its legislation regarding counterfeiting, the country is in dire need of more public awareness. The EUCCK IP Centre is taking steps towards achieving this by working on a public awareness campaign that aims to reduce end demand for these counterfeit products. There are also plans to put up posters with anti-counterfeiting messages, in different languages, at various ports of entry to warn visitors and residents.

The film industry, particularly beleaguered by piracy in South Korea, has made efforts of its own including an anti-piracy campaign bearing the slogan, ``I'm a Good Downloader,'' featuring top Korean stars.

Korea's Customs Service and KIPO, along with numerous Korean e-commerce sites and the European Chamber of Commerce, have been working with a number of famous brand owners to cut down on the proliferation of manufacturing, marketing and exporting of counterfeit goods, while other efforts include enlisting the help of everyday citizens by encouraging them to tell on people they encounter selling fakes and to reward them by paying bounties for their detective work!

Overview of fake products to look out for

Luxury items
‘super fakes’: they may look like the real thing but they’re not so don’t be duped a) into buying one mistaking it for an original or b) into thinking you have improved your street cred by carrying/wearing a fake item! Louis Vuitton is especially popular as a counterfeited item, as are Nike, Chanel and the German luxury brand MCM.

Software
South Korea has developed a reputation for rampant software piracy. Businesses and even public servants have been availing themselves of cheap, pirated software. Surprise raids on businesses and levying of hefty fines has brought the issue to the fore, and the government has been working closely with Microsoft to put the brakes on the trade in pirated software, however statistics show software piracy losses remaining pretty static at around $570 million per year.

Movies
South Korea has one of the largest film markets in the world, with ticket sales revenues and audience sizes ranking in the top ten globally. Unfortunately widespread circulation of pirated DVDs on the streets and movie files online is greatly harming the industry. ``In 2005, the Japanese film industry lost 82 billion yen (around 920 million dollars) due to the production and sales of pirated DVDs. Worldwide, the damage amounted to about 180 billion dollars,'' (Naoshi Yoda of T-Joy, quoted in Korea Times, October 2009).

Pharmaceuticals
A 2010 article in the Korea Herald stated that the amount of counterfeit erectile dysfunction medication that was being smuggled into the country had increased 23-fold in 2010. According to the officials quoted in the article, the amount of counterfeit medical substances smuggled onto the local market between January and July 2010 reached 90.8 billion won, over 99 percent of which was impotence cures such as Viagra and Levitra. Most of the fake medicine found here has been manufactured in China and are circulated in bulk at local black markets.

Shopping in Seoul

The Dongdaemun Shopping Complex (Great East Gate) is one of South Korea’s most representative markets and also where you can find lots of the fakes mentioned above! Ignore those and move on quickly to the much more valuable experience of sampling and perhaps purchasing one or more of the multitude of products available here including a fantastic array of fabrics, materials and accessories. The building also houses a flea market peddling everything from chopsticks and old records to handicrafts, second-hand clothing and even sex toys!

Myeongdong situated on Jung-gu is the best place to go for clothing of any size or style. There is a fine selection of high-street shops such as Zara, UniQlo, Forever21, ABC Mart etc, as well as market stalls where the vendors are happy to haggle over prices. Korean cosmetics are very affordable and when you go into shops here they often hand you free samples!

Namdaemun (Great South Gate), Seoul’s second-largest market, is famous for budget shopping (and another hotspot for counterfeits!). This open-air market is not as organized as Dongdaemum and tends to get really packed later on in the day so try to get there as early as possible – wholesalers operate from 6am to midnight and retailers from 7am to 5pm. Namdaemum is the best place to go to for Korean crafts and souvenirs.

Yongsan Electronics Market is next to Yongsan station and is wall-to-wall and floor-after-floor with videogames, laptops, cameras, televisions, self-cleaning toilets, appliances, and mobile phones. Most of what is sold here is Japanese-made and Japanese electronics sell for 2 to 3 times more than you pay in the US so the prices will not appear that low. If you have to buy something here, stick to Korean computer parts, Korean-made accessories or electronics. Samsung and LG electronics apparently have the best prices. Shop around as well because prices vary greatly from place to place.

The Coex Mall, situated at 159 Samseong dong, is a big and busy underground shopping centre with a wide range of, slightly pricier, items. The food selection gets a great write-up though and there is one larger, central food court with a mixture of foods and a smaller one with mostly Korean food. The mall also houses a museum dedicated to Kimchi (!), an aquarium and a cinema.

Insadong, 84-16 Jongno, is an 800 meter main street intersected with small alleys lined with numerous shops and galleries, both tiny and spacious: antique shops, Korean stationery stores, frame shops, handicraft shops, pottery and porcelain shops, bookstores and painting studios, and art supply stores. It’s a great place to go for souvenirs and gifts to bring home. Prices are slightly higher here for your average antique piece but there is more variety and the quality is considered better here.

Ewha Women's University (E-dae area) is situated beside Myeongdong and has a reputation as one of the most affordable shopping areas in town. The streets can be confusing and the array of products overwhelming but your money can go a long way here if you are a budget traveller. There are also a few good restaurants and cafés in the area.

Duty-free shopping
As in most countries, Korea has several shops where travellers can buy products without having to pay import duties or taxes. Products sold here can be as much as 50% cheaper than retail stores. The Korea National Tourism Organization (KNTO) operates duty-free stores at Korea's major airports and seaports. Several companies also operate duty-free stores in Seoul and near major tourist areas. Click here for a full list of duty-free shops in Seoul.

For further information on visiting South Korea, go to the official site of Korea tourism.