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Tuesday, April 26, 2005

Discount stores and small businesses (this time in Taebaek)

The increase of the number of E-mart, Lotte Mart and Homeplus shops (linked from Hankyoreh
Hankyoreh has an interesting piece on the reactions towards the government plan to ease restrictions concerning establishment of discount stores and other big retail establishments. (Here's my previous note on the subject from one week back.) Keepers of small businesses from Taebaek in southern Gangwon-do have come all the way to Seoul to protest against the proposed legislation, and similar feelings about the increased entry of huge discount stores are not surprisingly common among the small businesskeepers in the nation.
Taebaek marketplace trader:
"65% of the population in Taebaek are families of small and medium businesskeepers (chungsosanggongin). It is usual that with one huge retail establishment seven marketplaces (chaeraesijang) disappear. 65% are making a living in small shops (kumôngkage) and marketplaces, so what happens when E-mart comes? We are going to make this known at the Shinsegye [owner of E-mart] headquarters."
Shinsegye representative:
With E-mart, the local economy gets a boost. And in the provinces, apartments are built after a large-scale retailer is established. We have received requests from many local organizations in Taebaek to come and build a store there."

At this stage, it looks quite evident that the "traditional" marketplaces are not able to compete with E-marts, Lotte Marts, and Homepluses, while small neighborhood supermarkets may survive by selling snacks and drinks and other stuff for which people won't go far. The article quotes the local authorities asking what good is the new legislation for marketplace revitalization (Chaeraesijang t'ûkpyôlpôp) (for yet another self-link, see an earlier post of mine) if regulations concerning discount retailers are alleviated.

Even though arguing for the maintaining of market conditions favorable for myriad of small businesses would appear to be fighting against the tide of progress and modernization, I could also add that giving more room to huge retailers to operate goes against the government policies in place since the "IMF crisis" to encourage establishment of small businesses as one kind of measure against unemployment. (Now was this sentence too long or what. In Finnish, one paragraph is supposed to consist of more than one sentence.)

The "marketplace special law" has no doubt helped some marketplaces to renew their shopping facilities and image, but the article notes that the marketplaces won't be quick enough to respond to the swift movements of these big retailers. One bookshop keeper quoted in the piece has no small things in his mind. "To keep marketplaces alive it isn't enough just to erect a roof. Modernization (hyôndaehwa) needs to be made so that a shopping mall is built and marketplace traders allotted shop space there."

The new legislation will be introduced late next year if it proceeds as planned. I don't really know what to say. Expressing sympathy and appreciation for the efforts of small businesses is almost what this blog is about, and I'm not for unrestricted competition (real-world capitalism is about regulation as well, right?) (but as a consumer I like also cheap prices), but I'm afraid the call of modernization is too strong ("big retailers bring along apartment areas") to stop the current.

Hankyoreh editorials on the topic in Korean and in English.

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