Smuggling of Luxury Cars: Suspicious Export Practices Uncovered

Smuggling luxury cars through Kyrgyzstan raises suspicion due to circumventing export controls, posing diplomatic and economic concerns.

### Korean Luxury Car Smuggling Through Kyrgyzstan: Economic Support for Russia?
* 🚗 Hwang Jung-min, who starred in the movie "The Swindlers," is involved in a real-life incident related to **circumventing exports**. A group was caught smuggling exports to Russia to **evade export controls** at Busan Customs about a month ago.
* 🇷🇺 Due to international sanctions imposed after the Ukraine war, luxury cars like BMW, Mercedes-Benz, Jaguar, Land Rover, and Audi are continuously being exported to Russia. They managed to **evade by exporting to Malaysia first and then to Russia from Kyrgyzstan**.
* 📝 Dealers are receiving agreements and consent forms from consumers not to export. The contents usually include **fines if the car is bought and sold within a short period**.
* 💰 European luxury car brands are sold at higher prices in Russia, with a margin of around **30 million won for exporters**.
* 🇰🇬 Kyrgyzstan has become the **largest destination** for Korean used car exports, with a **dramatic increase** in both value and weight. The country has **low car tariffs**, making it advantageous for Central Asian exports.
* 🔍 The Ministry of Trade, Industry, and Energy is expanding the scope of control to prevent exports of vehicles with an **engine displacement of over 2cc**. The United States and European allied countries may view the situation as a **diplomatic issue**.
* 🛠 In addition to the economic aspect, there are export controls related to technologies that should not be used for weapons, as well as **tax refund benefits for used car exports**.
* 🕵 An undercover investigation on a logistics forwarding company revealed that there are many cases of exporting Korean luxury cars through Kyrgyzstan. Breaking the promise of international sanctions could **undermine trust in Korea's administrative capabilities**, so **strict enforcement is necessary**.

Let's start. Today is a special feature on smuggling. Do you remember the movie The Swindlers? Starring Hwang Jung-min and Ha Jung-woo. In that movie, Ha Jung-woo played the role of Kang In-goo, who helped the NIS (National Intelligence Service) and Jun Yeohan, the queen of magic powder. Now, Hwang Jung-min is involved in a real-life incident related to circumventing exports. About a month ago, a group that smuggled exports to Russia to evade export controls at Busan Customs was caught and sent to the prosecution. Since international sanctions have been imposed after the Ukraine war, export controls have been strengthened. They managed to evade by exporting to Malaysia first.

Due to the absence of sanctions, there was one route to send to Russia from here. And one more thing, before departing from South Korea, you have to declare exports to Kyrgyzstan and Kazakhstan. Yes, then when actually delivering the goods, you go to Vladivostok. It's fake documents, right? Yes, that's right. In this way, they also bypass exports to Russia, and until 2023, vehicles under $50,000 could be exported. So, by falsely declaring it as under $50,000, they export it. Have you ever visited a car dealership recently? No, I haven't. I went to a BMW dealership last week, and it was interesting. There are these notices. Deutsche Motors does not participate in exporting vehicles to Russia, Belarus, or Central Asia. I took this picture myself.

Why was this written like this? Nowadays, there are luxury cars like BMW, Mercedes-Benz, Jaguar, Land Rover, Audi, being exported to Russia. There are many suspicions that these cars are being exported to Russia. Oh, because of that, dealers are saying that this is not what we do. This is not what we do, and our employees are not involved in this. In fact, looking into how exporters are doing this, first, they go to the store and purchase a new car. Then, they will register it in Korea. But after registration, immediate export is not possible. Since it is registered in Korea, it will be deregistered shortly after. Then, they export it to neighboring countries like Kyrgyzstan. They leave the product there, and Russian importers come to Kyrgyzstan to pick up the product. What I am trying to say is, a while ago, we saw this in Busan.

There is customs, right? Because there is a disguised export. This can be caught in our country. But until it reaches Kyrgyzstan, the destination, that is a legitimate export. If you take the goods to Russia from there, you cannot catch them. Currently, there are many suspicions that something is happening in this way. So these days, dealers are doing various things. For example, they are receiving agreements from consumers who come to purchase, not to export. For instance, BMW states compliance with export control regulations in a confirmation letter, and JLR Korea, which used to be Jaguar Land Rover Korea, also receives consent forms from consumers who purchase new cars according to the export restriction regulations. Even Korean Toyota Motor is currently receiving export restriction consent forms. What kind of contents are included in these? If you buy and sell within a very short period, a few months, after purchasing, you will be fined.

I have to collect tens of millions of won, or I will file a lawsuit. It says things like this. However, if I buy a new car and immediately sell it as a used car, I will lose money, right? It seems like a loss to disguise a new car as a used car and sell it. Looking at the current situation in Russia where the Ukraine issue is escalating, European car companies have all pulled out, and Korean production plants have all closed down. Eventually, Hyundai's Russian plant was sold for 140,000 won. So, there are no cars. Especially now, European luxury car brands like BMW and Audi are continuously increasing in price. For example, a BMW 5 series that can be bought for about 70 million won in Korea is said to be sold for over 100 million won in Russia. In fact, from the perspective of a used car exporter, oh.

A margin of 30 million won is good, so it is speculated that these kinds of things are happening. Then, because statistics on the export of used cars are coming out, it is unclear whether they are actually exporting used cars as they are or if it is just that used cars are being exported. Let's try to classify that. First, last year, it was revealed what kind of items small and medium-sized enterprises in Korea exported the most. Cosmetics ranked first, and cars were second. The growth rate was quite high at 57.4%. However, when we talk about cars here, it refers to the export items of small and medium-sized enterprises. But among these small and medium-sized enterprises, there are companies that manufacture cars. Are Hyundai and Kia considered small and medium-sized enterprises? Ultimately, when it comes to the export of cars by small and medium-sized enterprises, it can be seen as the export of used cars. Used car companies are likely classified as small and medium-sized enterprises.

Let's take a look at where they went. Kyrgyzstan has the largest volume, $990 million, which increased by 300%. Oh, these statistics can be interpreted like this again, right? And Kazakhstan, with $360 million, although the amount is not very high, has a very high growth rate of 21%. Ah, earlier, we caught a glimpse of the exports. Surrounding countries, Kazakhstan, Kyrgyzstan, there seems to be something going on, right? It's suspicious, it seems like there's something. I remember when I used to cover news related to the export of used cars, places like Libya and Jordan used to have high rankings. But now, Libya and Jordan have high rankings, right? But back then, Kyrgyzstan and Kazakhstan were not regions that exported a lot of used cars. So, that's why, let's take a look at what kind of country Kyrgyzstan is.

I'm going to look into whether Kyrgyzstan is a country that lives well enough to import cars from South Korea. It is considered one of the poorest countries in the world, with a GDP of 13.7 billion dollars in 2023, while South Korea's GDP was 1.7 trillion dollars last year. It's not even 1/100 of that. It is a country that is emerging from the category of least developed countries designated by the UN, with 35% of the workforce engaged in the agricultural industry. So, suddenly, in a country where agriculture is a major industry, many Korean used cars are being driven, more than double, and even BMWs. When comparing the weight and price together here, it seems even more strange. I went to the customs office to find out which cars from Kyrgyzstan are being exported a lot. I personally went and got the data. But there are too many types of cars, right? There are vans and sedans.

There are skills, there is high displacement, there is gasoline, there is diesel, but among them, the cars that cost over $50,000 and should not be exported raise suspicion. Therefore, since it is difficult to divide based on this amount, I selected only high-displacement vehicles. Oh, in the country that produces the most crops, it is a bit expensive to buy, right? Therefore, I separately selected passenger gasoline cars from 1,500 to 3,000cc, passenger diesel cars from 2,500 to over 2,500cc, and more than 2,500cc diesel cars. Let me show you that. Now, let's look from the year 2022. It's $200 million. The control of car exports over $200 million started in 2023, and it increased from $200 million to $900 million and $100,000. Based on the amount, it's suspicious. This is really strange. But look at something even more suspicious. Let's look at it based on weight. 29,000 tons. This is 29,000.

The weight increased to 79,000 tons, which is about 2.7 times more. When we consider the same weight, it means that more expensive vehicles were exported, right? Yes, that's right. It's around $50,000. I can't tell exactly, but there's something suspicious, right? No, that's not it. Right, right. It's not the Grandeur. Yes, there used to be the Grandeur, but now it's changed to BMW's bench. That's how we can see it, right? Yes, that's right. So, we looked at Kyrgyzstan, and compared it to countries like Kazakhstan. Yes, it's the same. But there are slight differences. Look, it didn't increase that much from $270 million to $320 million. The weight also didn't increase significantly from 17,000 tons to 22,700 tons. This also didn't increase significantly. Kyrgyzstan's costs increased dramatically, but Kazakhstan didn't reach that level.

So why is this happening? When we covered this, there was a reason. Kyrgyzstan has low car tariffs. It's quite advantageous for Central Asian countries to export through there. But other countries have to pay at least 15% as a basic rate. However, Kyrgyzstan can export at 12%. Therefore, there is speculation that some volume of goods is being directed to Kyrgyzstan. Next, what I will show you is, as I mentioned earlier, how they export. They cannot export brand new cars as they are. They need to be registered. When they are registered in our country, deregistration is required. So, there was recent data presented through a lawmaker's office about cars that were deregistered in a short period. Let's take a look. Although it's a bit old data, from April 2023, a report was released by Assemblyman To Wi-heung's office. It is about vehicles deregistered for export purposes within two months.

I looked at the number of imported cars. In 2021, there were 42 units, and then in 2022, 147 units. Of course, at this time, cars were not included in the items under export control. However, typically, it was less than 50 units, and suddenly increased. As of March 2023, 600 units were registered. Within three months, it increased to 600 units. So, this is quite a lot, and some suspicious circumstances are starting to show. Therefore, the Ministry of Trade, Industry, and Energy is now paying attention and looking into it. So, they are currently expanding the scope of control. Previously, it was said that vehicles costing less than $50,000 should not be exported. Now, it is said that vehicles with an engine displacement of over 2cc should not be exported, and they are conducting a lot of investigations and crackdowns on circumventing exports. So, now, by preventing exports, they are trying to stop economic support to Russia and instead support the war in Ukraine.

Korean people who can sell goods at high prices can make some money. That can be seen that way, but currently, the United States and European allied countries are cooperating and imposing international sanctions. However, the United States and Europe have withdrawn from Russia, but if Korean small and medium-sized enterprises make money by utilizing that market, it may be seen as a diplomatic issue by the United States and Europe. If they hear that allied countries are telling us to make money there, they might say, You came out, and now you are telling them to make money there. This could lead to some disputes. This could be the first issue, and there are other things as well. So, when controlling exports, there are technologies that should not be used to make weapons. Therefore, there are export controls related to semiconductors, and recently, there was an incident related to machine tools as well.

So, the thing about precision machining equipment is that it's not a big deal for general machining equipment, but in the case of precision machining equipment, it is used to produce mass destruction weapons. So, if you export precision machining equipment to Russia, you are actually exporting it to make weapons, so this can be a problem. Another thing is that there are some tax refund benefits for those who export used cars. For example, in order to recycle them, but in fact, vehicles under one year old are not eligible for a refund, so there are many stories about people using some sort of loophole to get refunds. So, these people actually sell them cheaply and make a lot of money, like buying for 70 million won and earning 100 million won, or making 30 million won at least. They even illegally export them and still get tax refunds. This is the situation.

It could be possible, but someone is providing it there. In that case, shouldn't we consider the person who provides it as an accomplice? Such thoughts come to mind. That's why I also conducted an undercover investigation on the logistics forwarding company. What is an undercover investigation? Pretending not to be a journalist and trying out an investigation once. First of all, going to Kyrgyzstan, going to Kazakhstan, there seems to be no problem with that. In fact, they guide you on what to do. So, when I asked if there would be any issues if it exceeds 2000cc for export control, they said, Oh, there's no problem. They don't even know how many have been sent out today. And when I asked which is more common between Korean cars and imported cars, they said imported cars are still more common. So, based on various circumstances, it seems that there are quite a few cases where people buy cars from BMW, Audi, Benz, and Volkswagen and then export them in a roundabout way.

But in fact, in the case of used car sales, there have been many cases even when it comes to Libya. When I was covering used cars, I wondered why there are the most exports to Libya. Then I found out that Libya is in a state of civil war. So, they go in that direction and sell to neighboring countries. However, in reality, Libya is not a country under export control, so that doesn't matter. I'm not sure how to evaluate it. In a situation where exports to Russia are controlled, it is clear that going through Kyrgyzstan to bypass that is suspicious, based on the evidence shown by reporter Lee Jo. Oh, this shouldn't happen. This is a kind of international promise, and if you break the promise, it will undermine trust in Korea's administrative capabilities, so strict enforcement is necessary.

It seems like it will happen, but anyway, it seems to be a very interesting case. It's the real-life version of the Handyman incident. [MUSIC]

밀수출로 돈 버는 사람들😡

복잡하고 어려운 지식 컨텐츠를 쉽고 재미있게!
압도적 지식 컨텐츠 압권팀 입니다.
재미있게 봐주세요😁

👇 각종 문의는 아래 연락처로 부탁드립니다 👇


압권 Apkwon

Hwang Jung-min, known for his role in The Swindlers, is now linked to a real-life export smuggling case to Russia.

The smuggling operation involved bypassing export controls by initially shipping the cars to Malaysia before sending them to Russia, in order to evade international sanctions.

Luxury car dealerships in South Korea have been suspected of exporting vehicles to Russia, leading to disclaimers from some dealerships.

The Suspected Export of Luxury Cars from Korea to Russia

Luxury car dealers in Korea are suspected of disguising exports to Russia, leading to the need for export restriction consent forms from consumers.

The escalating Ukraine issue has caused a shortage of European cars in Russia, leading to a significant price increase and speculation of exporting used cars as new ones.

The export of cars from Korea, especially luxury cars, is on the rise, with suspicions of small and medium-sized enterprises being involved in exporting used cars.

The Unusual Increase in Car Exports from Kyrgyzstan

Kyrgyzstan has seen a significant increase in car exports, with a volume of $990 million and a 300% growth rate, despite being one of the poorest countries with a major agricultural industry.

The country has also shown a sudden surge in exporting high-displacement vehicles, including BMWs, raising suspicion about the reasons behind this unusual trend.

The export volume and the weight of the cars being exported raise questions about the nature of this sudden increase in car exports from a primarily agricultural country.

The weight of car exports from Kyrgyzstan has increased significantly, indicating the export of more expensive vehicles.

This is due to the country's low car tariffs, making it advantageous for Central Asian countries to export through Kyrgyzstan.

The Ministry of Trade, Industry, and Energy is expanding its control to prevent the export of vehicles with an engine displacement of over 2cc, aiming to curb economic support to Russia and instead support the war in Ukraine.

Challenges and Controversies in Korean Export Practices

The cooperation between the US and European allied countries in imposing sanctions on Russia may create diplomatic issues for Korean businesses entering the Russian market.

Export controls on technology, such as semiconductors and precision machining equipment, are in place to prevent the production of weapons, posing challenges for export businesses.

There are controversies surrounding tax refund benefits for the export of used cars, with reports of people exploiting loopholes to make significant profits, raising questions about potential accomplices and the need for further investigation.

The Impact of Civil Unrest on Used Car Sales

Libya's civil war has led to a high demand for used cars, driving exports in that direction.

Despite the attempt to bypass export controls, strict enforcement is crucial for maintaining trust in Korea's administrative capabilities.

The situation reflects real-life challenges and the need for careful monitoring of international trade.