Small businesses are reacting angrily to the upcoming changes in the Distribution Industry Development Law. The revisions that are soon to take effect include relaxing regulations to make it easier to build chain superstores. Merchants in the Gangwon province city of Taebaek have come all the way to Seoul City Hall to protest the construction of a large discount store in their community, and merchants operating in traditional markets around the country are forming a national organization in order to respond as a group. That can be seen as the result of a sense of crisis, since they had been calling for tighter regulations but instead those are being further liberalized.
Even if standing up to foreign capital and providing consumers with more convenience through modernization and larger stores is the trend, regular merchants have reason for protest. Large discount stores are now reaching Korea's mid-sized cities, and the fact that merchants are losing the basis for their livelihoods must not be ignored. The government's policy on the distribution industry is slanted towards the efficiency of market supremacy and is largely to blame. Korea can be criticized for neglecting conditions for merchants in mid-sized businesses, especially when you compare policy to foreign countries that have buffer provisions in place such as not allowing chain superstores in areas lacking a set minimum population or maintaining restrictions on their operating hours.
It has been almost 10 years since the opening of the distribution market in 1996. The Korea Institute for Industrial Economics and Trade says that between 1996 and the end of last year around 80,000 small retail businesses (4 employees or less) closed their doors. One does not deny the positive benefits of the market opening, such as price stabilization. But there needs to be a comprehensive review of the positive and negative effects and an organized approach to improving the situation. Relaxing regulations is not the best way to go about it. The government needs to find ways to make things easier for mid-sized distribution companies and merchants, and, where necessary, even tighten up on existing regulations. Conglomerates, for their part, need to reconsider their business strategies, particularly whether they should even sell items sold in regular neighborhood stores. The situation would be improved if conglomerates took the initiative in finding ways to coexist.
The Hankyoreh, 26 April 2005.
[Translations by Seoul Selection (PMS)]
[Editorial] Helping Small Retailers in an Era of Superstores |
