Conflict Over 'Saneopyongjae' Rekindled... Small Business Groups Condemn Yujin Group

Exterior view of 'Ace Hardware' Ilsan branch (Photo by Eugene Group)

[Asia Economy Reporter Kim Daeseop] The conflict over industrial supplies between Eugene Group and small business owners has flared up again. With the Supreme Court ruling on the administrative lawsuit related to Eugene Group's home interior and construction materials brand 'Ace Home Center (now Ace Hardware)' imminent, small business organizations have begun actively opposing the business expansion.

On the 19th, the Korea Industrial Supplies Association and the Federation of Small Businesses held a press conference condemning Eugene Group's expansion of its industrial supplies distribution business at the Korea Federation of SMEs in Yeouido, Seoul. These organizations plan to hold protests in front of new Ace Hardware stores, one-person demonstrations at the Blue House and the National Assembly, and other off-site struggles.

◆Demand for survival rights ahead of Supreme Court ruling= At the press conference, Shin Chanki, president of the Korea Industrial Supplies Association, stated, "Eugene is continuously opening large marts in key locations nationwide, planning about 100 stores. As the number of stores increases, all self-employed people currently running businesses in each region will inevitably have to close down."

President Shin reiterated his concerns, saying, "The number of unemployed people produced will be several times greater than the jobs created by the new stores, delivering a fatal blow to the livelihoods of tens of thousands of families and employees."

About 50 people, including association presidents from the Korea Industrial Supplies Association, the Federation of Small Businesses, the Bearing Sales Association, and the Korea Interior Managers Association, attended the press conference. Small business organizations are paying close attention to the appeal ruling on the administrative lawsuit filed by Eugene Group affiliate EHC at the Seoul Administrative Court.

Shin Chanki, President of the Korea Industrial Supplies Association (third from the left in the front row), and Choi Seungjae, President of the Korea Federation of Micro Enterprise (fourth from the left in the front row), along with other officials, held a press conference on the 19th at the Korea Federation of SMEs in Yeouido, Seoul, condemning the expansion of Eugene Group's industrial supplies distribution business.

President Shin pointed out, "The first and second trials ruled in favor of Eugene because visible damages related to Eugene's large marts could not be proven, but this was a wrong decision that failed to foresee several years ahead." He added, "In legal judgments, I hope the basis for judgment will prioritize guaranteeing the survival rights of hundreds of thousands of small business owners who have quietly contributed nationwide as the foundation of national economic development and are still faithfully performing their roles."

An Suheon, secretary-general of the Korea Industrial Supplies Association, said, "The Supreme Court hearing on the related administrative lawsuit has been underway since the end of January, and it is expected that the ruling will take more than 2 to 6 months."

The conflict between Eugene Group and the Industrial Supplies Association and the Federation of Small Businesses began in 2017. At that time, news spread that Eugene Group was preparing to open industrial supplies stores domestically in partnership with the U.S. Ace Hardware, which operates large building materials and tool chain stores. Small business organizations held a press conference in November of that year, criticizing Eugene Group and warning that if the opening proceeded, it would face nationwide resistance.

◆Conflict over 'industrial supplies' reignited with new store openings= However, Eugene Group pushed ahead with opening the first store in Doksan-dong, Geumcheon-gu, Seoul, through its affiliate EHC. In response, small business organizations formed an emergency countermeasure committee, applied for business adjustment to the Ministry of SMEs and Startups, and engaged in collective actions such as petitions to the Blue House and general strikes to withdraw the opening. Both sides held six rounds of coexistence agreements and voluntary adjustment meetings for negotiations, but talks failed.

Interior view of Ace Hardware Geumcheon branch.

The Ministry of SMEs and Startups, after deliberation by the Business Adjustment Deliberation Committee, recommended in March 2018 to postpone the opening of the first store by three years. Business adjustment is a system that recommends large corporations to postpone or reduce business acquisition, commencement, or expansion when their entry is expected to cause management damage to small businesses. The postponement decision can be extended once for an additional three years.

Eugene Group did not accept the Ministry's business adjustment decision. Through EHC, it filed a provisional injunction for suspension of execution and a lawsuit to cancel the postponement recommendation at the Seoul Administrative Court against the Ministry. In May 2018, the Seoul Administrative Court approved the injunction, and in June of the same year, the first Ace Home Center store opened.

Since then, the company has expanded stores by opening locations in Mokdong, Yongsan, and Ilsan, Gyeonggi Province. EHC is considering opening an additional Ace Hardware store near Namyangju, Gyeonggi Province, within this year. However, EHC is facing difficulties in expanding new businesses due to opposition from the Ministry and small business organizations, causing setbacks in business plans. In October 2019, Eugene Group changed the brand name from Ace Home Center to Ace Hardware.

Ace Hardware is a 'home improvement' specialty store where customers can conveniently and easily purchase everything needed to decorate and maintain their homes in one place. It offers about 40,000 products including interior materials, tools, hardware, and household goods in a one-stop shopping experience. Each store has category experts on-site who provide consultations on materials suitable for home environments and training on installation and construction methods.

◆Expansion of consumer convenience vs. small business closure crisis= Eugene Group emphasizes that the business is aimed at consumer convenience and market expansion. It also continues efforts to communicate and coexist with small business owners. On the other hand, small business organizations view Eugene Group as using its capital power to take over commercial districts, seeing it as a threat to the survival rights of small business owners. This is why the two sides are sharply divided and experiencing conflict.

In March 2018, small business owners held an outdoor protest opposing the opening of the first Ace Home Center (now Ace Hardware) store.

The Korea Industrial Supplies Association and the Federation of Small Businesses argue that the anticipated convenience for general consumers, such as one-stop shopping, will actually result in bigger problems due to price monopolization. They demand withdrawal from the industrial supplies wholesale and retail market.

In response, Eugene Group repeatedly emphasizes that the fundamental business purpose of Ace Hardware, operated by EHC, is not competition with small business owners but 'expanding new markets together.' While strengthening cooperation with small and medium-sized enterprises, it plans to continuously promote social contribution activities needed by socially vulnerable groups and small business owners, centered on Ace Hardware's expertise and capabilities.

A representative from Eugene Group's EHC said, "We regret that Ace Hardware is being misunderstood unnecessarily," adding, "We are ready to listen to opinions that can grow the entire market together through good partnerships not only with small business owners but also with small and medium manufacturers, aiming for co-growth rather than competition." He emphasized, "We will continue to strive to find coexistence measures that satisfy customers, small business owners, and Ace Hardware alike."

This content was produced with the assistance of AI translation services.