(Background)

Manufacturers and sellers of cosmetics that import, distribute, and sell cosmetics products must hire manufacture-sales manager with certain qualification to register as a cosmetics manufacturer-seller. As for the filing company, it wishes to diversify its business portfolio by importing and selling fashion accessories and cosmetics in addition to its major apparel business.

(Major issues)

Although the filing company’s head office in Korea is in general charge of all the subsidiaries in the country, the law prescribes that a manufacture-sales manager should be hired at all subsidiaries (9 subsidiaries under a total of 7 brands). However, having the manufacture-sales manager for all subsidiaries will significantly increase the labor cost. As stated above, the filing company’s major business is apparel, so the compliance with the law for a mere share of cosmetics import business is too burdensome.

The Office of Foreign Investment Ombudsman (OFIO) received the grievance and introduced the issue as the agenda item for the Foreign Investment Advisory Council Meeting (FIAC) meeting. At the meeting, it was requested to the Ministry of Food and Drug Safety (MFDS) that if the parent company owns more than 50% of the subsidiary’s share, one cosmetics manufacture-sales manager be hired for all subsidiaries that import or deal with cosmetics products, and allow the manufacture-sales manager to be hired under the fixed-term contract. The MFDS fully accepted the request and delivered the changed outline for system improvement to each regional office of the MFDS. The filing company appreciated the change and will soon report the new manufacture-sales manager to the Seoul Regional Office of the MFDS.