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Tefal, Philips blasted for huge margins

May 21, 2012 - 19:39 By Korea Herald
The distribution margin of European-brand electric irons amounted to almost 130 percent of the import prices, a local consumer advocacy group said Monday in a recent survey.

The Korea Consumer Agency, supported by the Fair Trade Commission, surveyed the Korean prices of 41 electric irons, including 18 from Tefal, three by Rowenta and 20 from Philips, over the past month.

The survey, which was originally aimed at monitoring their price difference following the Korea-EU free trade pact, found a 15.1 percent price cut in Europe-made irons compared to the second quarter of last year.
Iron by Tefal (left) and Philips

However, the brands raised the prices of cheaper iron models made in other regions such as China and Indonesia by 9.6 percent, prompting a 5.1 percent increase in the local prices of import irons on average.

The consumer group also found that importers and retailers of the European brands have also sought an average distribution margin of 129.6 percent in the sales of irons.

As a result, the Korean units of the brands imported an electric iron at 36,600 won ($31.28) from their European countries of origin, sold it to retailers at 54,103 won and then consumers purchased the product at 84,027 won.

Currently, Groupe SEB Korea imports France’s Tefal and Germany’s Rowenta, while Philips Electronics Korea is exclusively responsible for marketing the products of the Netherlands-based Philips.

Their major distribution channels such as large supermarket chains and specialty shops were also found to have raised the prices overall, the group said.

Even with reasonable prices and quality after-sales services, the prices at online markets were up to 38 percent cheaper than in major department stores.

“European brands need to set product prices considering diverse factors such as the abolition of 8-percent tariffs on electric irons since the Korea-EU FTA took effect in June last year,” the group said.

“As the small home appliance market here is largely dominated by a few importers, the government must continue monitoring their prices on regular basis.”

By Lee Ji-yoon (jylee@heraldcorp.com)