Investing in Japan
Success Stories Global Tax Free Co., Ltd. (GTF)
The Korean company Global Tax Free (GTF), Asia's largest tax refund service provider for foreign tourists, established a branch office in Fukuoka in July 2015. The Fukuoka office is its second location in Japan following Tokyo. Japan expects a surge of foreign tourists in the time leading up to the 2020 Tokyo Olympic and Paralympic Games. GTF strives to expand its services by targeting this influx of tourist.
Founded in Seoul, Korea in December 2005, GTF was the first tax refund company for foreign tourists in Asia. While competitors in Europe and other areas only develop and sell duty-free shopping systems, GTF provides a comprehensive service, which includes the entire operation of duty-free counters. Traditionally, it takes time and money for stores to launch a duty-free counter service, and GTF has eased that burden for stores. In addition, by offering various services related to duty-free shopping, GTF differentiates itself from its competitors. This has led to a rapid increase in its market share in Korea, where it has supplied 6,000 stores with its services. It has become the leading company in Asia with operations beginning in Singapore in 2011, Tokyo in 2012 and Fukuoka in 2015.
Reason for expansion into Japan
Jino Lee, CEO of Global Tax Free Japan (GTF Japan), said that his company’s reason for entering the Japanese market is because Japan has been widely recognized as a tourism-oriented country. He explained, "Until recently, there have not been many tourists from overseas in Japan. However, since Japan was chosen as the host for the 2020 Olympic and Paralympic Games, the number has been rapidly increasing. After the Games, I expect the number to continue climbing steadily." He added, "One of the reasons why they visit Japan is shopping. In Japan, there is a wide variety of models for each product category. Many international visitors to Japan are attracted to these variations." Anticipating an increase in inbound tourist consumption and a growing demand for tax refund services, GTF decided to set up a company in Japan. Currently, the company views that the Japanese market is in a more promising position than that of Korea, where the company is headquartered.
Advantages of GTF's unique tax refund services
Conventionally, in order to install and manage duty-free counters in a large commercial complex, the facility manager has to resolve a wide range of issues. They include introducing a duty-free counter system and hiring counter staff. These issues are taken care of under GTF's comprehensive tax refund service. GTF will even pay the cost of installing duty-free counters. This relieves facility managers of these arduous tasks, while eliminating the need for a complicated tax refund procedure for each tenant. The only thing tenants have to do is issue receipts as usual and then take customers to the GTF counters.
GTF also offers unique services related to duty-free shopping. For example, as a marketing support activity for affiliated retailers, it provides free marketing reports that can be used to analyze each retailer’s sales trends, based on detailed purchase data that has been collected in the tax refund process. In addition, GTF works together with logistics companies to offer a courier delivery service that allows its duty-free counter users to receive their purchases at their hotels.
Its services include refunding taxes to UnionPay cards, the most popular credit card in China, for Korean and Chinese customers, as well as to e-money accounts, something which has yet to be introduced in Japan. This service meets the needs of foreign visitors who do not want to receive foreign currencies just before returning home.
Business strategy for Japan
GTF's focus in its strategy for Japan is on sales promotion for retail outlets and shopping malls. Not many of them use services related to duty-free shopping, unlike department stores, which have close ties with traditional duty-free shopping system companies. According to Mr. Lee, those retail outlets and shopping malls have various tenants that sell general goods and consumables with different conditions for tax exemptions. Furthermore, their receipts are in different formats, requiring the staff of duty-free counters to perform complicated tasks. GTF has a proven track record and specialized knowledge in this area. In July 2015, the company established a duty-free counter for international visitors in Canal City Hakata, a shopping mall in Fukuoka. Even further in the future, it will work with a real estate developer to supply its service to a shopping mall that plans to open.
GTF is also trying to improve its market share in local regions in Japan. As these areas have recently been drawing in more foreign tourists, they have become aware of the need for tax refund services in local commercial complexes and shopping streets. However, establishments in these regions do not have the skills and knowledge for installing these systems or hiring the necessary staff. This has resulted in more inquiries and opportunities for GTF, allowing the company to engage in talks across Japan in addition to the major cities that had been its focus until recently.
Support from JETRO
Before GTF established its subsidiary in Japan, it consulted the Invest Japan Business Support Center (IBSC) of JETRO about issues such as registration, visas and taxes. In December 2015, Mr. Lee was invited as a guest speaker to the "Networking with International Tourism-related Companies," event which was held in Fukuoka and sponsored by JETRO. He also attended a networking meeting with local companies. He said, "When we expand into new countries and regions, we often encounter problems that we have never faced before in Korea. We were very grateful for JETRO's support for the establishment of our subsidiary when we these issues came up in Japan. At the networking event, we met representatives from companies in Fukuoka and the rest of the Kyushu region, which benefited our business practice. We hope to be able to continue relying on JETRO’s support."
Jino Lee, CEO of Global Tax Free Japan, Global Tax Free Co., Ltd.
(June 2016 interview)
|December 2005||Establishment of Global Tax Free Co., Ltd. in Seoul, Korea|
|July 2012||Establishment of Global Tax Free Co., Ltd. Japan in Minato-ku, Tokyo|
|July 2015||Establishment of branch office in Fukuoka City, Fukuoka Prefecture|
Global Tax Free Japan
|Business||Provision of a comprehensive duty-free counter service, the development and sale of duty-free shopping systems and the provision of services related to duty-free shopping|
|Parent company||Global Tax Free Co., Ltd.|
Tokyo Office: Sankaido Bldg., 6th Floor, 1-9-13, Akasaka, Minato-ku, Tokyo 107-0052
Fukuoka Office: No.7 Okabe Bldg., 8th Floor, 2-20-15, Hakataekimae, Hakata-ku, Fukuoka City, Fukuoka 812-0011
- Support for corporate establishment procedures (registration, visa and tax issues, etc.)