Korea Customs Service launches sweeping crackdown on fake 'Made in Korea' products

The Korea Customs Service announced Wednesday it is overhauling its approach to customs administration — shifting from a traditional enforcement-only model focused on detecting and punishing violations to a "mutual-growth" model that addresses industry pain points and helps law-abiding businesses expand.

The agency said it will pursue a two-pronged strategy to protect Korean manufacturing: rooting out unfair trade practices involving fake "Made in Korea" labels, while providing export support to small and midsize manufacturers with regionally specialized products.

The initiative will run for three months, from November through January, with special enforcement operations and business support measures rolled out simultaneously through customs offices nationwide.

To identify target products, the agency will conduct a comprehensive review of regional manufacturing conditions, survey results from small and midsize manufacturers, opinions gathered from local governments, and records of past unfair-trade violations. Based on this review, it will designate "regionally specialized manufactured goods" — products that have long underpinned local economies and employment — and launch special enforcement operations in coordination with relevant ministries and industry groups to prevent and block unfair practices such as origin mislabeling.

To build a permanent rather than one-off cooperative framework, the agency plans to sign MOUs titled "Protection of Korean Manufacturing" with local governments and producer associations in each customs jurisdiction in November, on a rolling basis. Through these agreements, the parties will share information on regional industry conditions and business difficulties, and jointly identify and connect small manufacturers with the support programs they need.

Until now, origin-labeling enforcement, customs audits, free trade agreement origin verification, counterfeit-goods crackdowns and criminal investigations have each been conducted separately. As a result, when a single product was entangled in multiple forms of unfair trade, there were limits to how comprehensively authorities could examine the full picture.

Passing off imported goods as domestic products allows sellers to exploit the premium reputation of "Made in Korea" quality while charging higher prices. Undervaluing imports at customs, meanwhile, enables tax evasion — and the taxes saved translate directly into the capacity to undercut competitors on price.

Counterfeiting Korean brands compounds the damage further: it not only seizes the market channels that domestic manufacturers worked hard to build, but also erodes the brand value accumulated over years, ultimately undermining the global competitiveness of Korean companies.

The new "integrated customs enforcement" system consolidates all five of the agency's enforcement tools into a single framework covering the entire supply chain — from imports through retail distribution to exports. The agency said it will introduce this system starting with the current special enforcement drive, maximizing the industry-protection effect by examining all potential violations in one coordinated sweep.

Through inter-departmental coordination, the agency will pre-screen businesses suspected of multiple violations, agreeing in advance on risk factors and investigative approaches to prevent enforcement gaps. It also plans to link import-stage customs inspections, distribution-stage crackdowns on simple assembly or processing operations, and export-stage investigations into origin laundering into a single "import-distribution-export full-cycle defense system" — cutting off the balloon effect by which illegal activity simply migrates from one stage of the supply chain to another.

Alongside enforcement, the agency will provide support to small and midsize regional manufacturers. Through customs export-import business support centers, it will offer FTA utilization consulting, assistance in responding to origin verification requests, and help resolving overseas customs difficulties. Working with partner institutions, it will also identify support programs tailored to local business needs — protecting the production base of honest small manufacturers while backing the export of genuinely domestic products.

Through the special enforcement drive, the agency said it expects three outcomes: restoring fair price competition distorted by rule-breaking to protect the sales channels and regional employment base of law-abiding manufacturers; safeguarding the credibility and export competitiveness of Korean brands by blocking origin mislabeling, origin laundering for re-export, and counterfeit goods; and preemptively eliminating trade risk factors by preventing Korea from being used as a transit point for origin laundering.

The nationwide special enforcement operation will run from November through January. Businesses caught in violation will face strict penalties under applicable laws, including fines of up to 300 million won ($227,000) under the Foreign Trade Act, criminal charges, and recovery of evaded taxes under the Customs Act. Any regulatory improvements identified during the enforcement process will be swiftly addressed in consultation with related ministries.

Unfair trade practices such as origin mislabeling can be reported through the Korea Customs Service website or the smuggling tip line at 125. Informants may receive a reward depending on the outcome of the investigation.

Korea Customs Service Commissioner Lee Jong-wook said honest small and midsize manufacturers are losing ground to a "double foul" — competitors free-riding on the trust built around Korean-made goods. "We will bring together every tool at customs administration's disposal to level a playing field tilted by origin fraud, tax evasion and counterfeiting," he said, "and work with local governments and industry to create an environment where regional manufacturers can compete and grow on fair terms."