Who Bears Operating Costs and Liability When You Sell in Korea

Whether Kontactic sells under its own Korean entity (Spark Subscription or Spark Project) or runs your own Korean entity for you (Blaze), the client bears every operational cost and carries product and advertising liability. Kontactic operates the machinery; it never takes on your inventory risk, your product risk, or a stake in your business. That single principle is written into every service agreement, and it explains almost every "wait, who pays for that?" question a foreign brand asks in its first month selling in Korea.

The confusion is understandable. When an operator handles your customs clearance, files your VAT, runs your Coupang account, and sometimes writes your ads, it looks like the operator is taking the business over. It isn't. Below is how the money and the liability actually flow — and why the answer is the same across services even though the mechanics differ.

The rule: you fund the costs, always

The short answer is that inventory procurement, international shipping, platform fees, advertising spend, and every other cost tied to selling your product are ultimately borne by you — whichever service you use.

What changes between services is how those costs get funded, not who they land on.

• Spark — costs are deducted from Settlement Funds. Kontactic collects the sales revenue, subtracts operational costs and service fees, and remits the net. If revenue is short, you cover the shortfall.
• Blaze — costs are funded from your Korean entity's revenue, or paid directly by you. Because the entity is yours, the money was always yours; Kontactic prepares the payment requests and remittance paperwork, and your entity makes the payments itself.

This is deliberately unglamorous. An operator that quietly absorbed your ad spend or fronted your inventory would be a distributor or a co-investor — and that changes the tax posture and the incentives. Kontactic is not a distributor: we don't set your prices, take inventory risk, or keep a margin, so the economics stay yours.

If you want the line-item version of how these costs sequence before you see a cent of remittance, we walked through it in who pays for what in Korea.

Why the mechanics differ: Importer & Seller of Record vs operating agency

The reason Spark deducts from settlement while Blaze funds from your entity comes down to a different legal relationship underneath each.

Under Spark, Kontactic's own Korean entity is the Importer & Seller of Record. You have no Korean entity. Spark Subscription does this on Coupang for Coupang-approved sellers in mainland China; Spark Project does it for one defined project, such as B2B supply to Korean trade buyers or a one-off import. Because our entity is the importer, for customs and tax it holds legal title to the goods it imports and sells. Commercially, the business stays yours: you keep control of pricing, your brand, and what happens to unsold stock — and you're paid for what sells. Because Kontactic collects the revenue as the seller, it deducts costs and fees from those Settlement Funds and remits the net to you.

Blaze is an operating agency arrangement (운영대행). A Korean limited company (유한회사) that you own is the Importer of Record and Seller of Record. Kontactic is the authorized operating agent; it takes no access to your entity's bank accounts and signs nothing in its name. The revenue lands in your entity, so operational costs — Coupang selling commission, Rocket Growth storage and fulfillment, returns handling, net VAT, advertising — are satisfied from your entity's revenue before any remittance to your parent company.

One consequence worth budgeting for: because Blaze runs on your own Korean entity, that entity has its own tax filings. Our tax filing service for that entity is priced on its own: USD 1,200 per year, covering VAT filing and corporate tax filing coordination, for up to 100,000,000 KRW in annual revenue. Under Spark there is no such fee — VAT is filed under Kontactic's entity at no additional cost to you, because it is Kontactic's entity doing the filing.

The liability that comes with your product

Because it is your product and your brand, you also carry the product-level and advertising liability. This is the part brands most often expect to hand off, and it is the part that does not move.

Under every service, you bear sole responsibility for any claims, disputes, regulatory actions, penalties, or liability arising from advertising content, product claims, and marketing materials — whether you created that content yourself, provided it to Kontactic, had Kontactic create it on your behalf, or developed it jointly.

That last clause surprises people. Under Blaze, Kontactic may actually produce the creative — but the agreement is explicit that creatives produced by Kontactic are subject to your approval, and you hold full responsibility for product claims, substantiation, and regulatory exposure. In practice this means the approval step is not a formality; it is where liability crystallizes. We look at that approval-and-liability split in more detail in who approves your Korea ad creative and who is liable.

Product liability follows the same logic. Product-level liability rests with you at all times. Under Spark, where our entity is the importer, the agreement spells this out: you are responsible for product compliance and indemnify us. That covers claims arising from the products themselves — defects, safety issues, regulatory non-compliance, labeling failures, IP infringement — as well as claims from advertising, platform-policy violations attributable to your products, and any customs penalties from non-compliant documentation.

None of this makes the arrangement risky in a loose sense — it makes the structure honest. You keep the upside because you keep the exposure. And it is why the word "risk-free" never appears in a Kontactic agreement: compliance responsibility is genuinely yours, and pretending otherwise would misrepresent the structure.

Common questions

If Kontactic collects the money under Spark, isn't it Kontactic's revenue? Not commercially. Because our entity is the Importer & Seller of Record, the sale runs through it for customs and tax, and it holds legal title to the goods it imports and sells. The economics stay yours: you set the price, and you are paid for what sells — sales minus platform fees, logistics, advertising, duties and taxes, and our fees. We keep no margin; we charge our fees.

Does Kontactic ever front my inventory or ad spend? No. Operational costs are ultimately borne by you. Under Spark they are deducted from Settlement Funds; under Blaze they are funded from your entity's revenue or paid directly by you.

If Kontactic writes my ad and it violates a regulation, who is liable? You are. Under Blaze, Kontactic-produced creatives are subject to your approval, and you hold full responsibility for product claims and regulatory exposure regardless of who drafted the content.

How do I pay Kontactic's service fees under Blaze? By one of two methods agreed in writing: a local KRW transfer from your Korean bank account, or a monthly USD invoice paid by international wire within fourteen (14) calendar days of issuance.

Why does Blaze have a tax filing fee but Spark doesn't? Because Blaze uses your own Korean entity, which has its own VAT and corporate tax filings — our standalone tax filing service is USD 1,200 per year, up to 100,000,000 KRW in revenue. Spark files VAT under Kontactic's entity, so there is no separate fee.