Election Season 'Regulation Nightmare' Leaves Distribution Industry with Troubled Expressions

Politicians Announce Regulatory Pledges on Complex Shopping Malls

The Age-Old 'Large Corporations VS Small Business Owners' Conflict

Policies Tightening the Distribution Industry Already Struggling Due to COVID-19

Due to the impact of COVID-19, consumer sentiment is shrinking, and on the 11th, Lotte Mart Seoul Station branch in Jung-gu, Seoul, is showing a quiet scene. Photo by Jinhyung Kang aymsdream@

[Asia Economy Reporter Lim Hye-sun] The retail industry’s mood watching the April 15 general election is complicated. Every election season, large retail corporations become the usual political target for politicians aiming to build a pro-commoner image. This time, it is complex shopping malls. Policies claiming to support small business owners propose restricting the location and operating hours of complex shopping malls and designating mandatory closing days. The political sphere is reviving the old 'large corporations VS small business owners' conflict and introducing policies that further tighten the already struggling distribution industry due to the novel coronavirus disease (COVID-19).

According to the National Assembly and the retail industry on the 6th, the ruling party, the Democratic Party of Korea, and the proportional representation party, the Together Citizens’ Party, announced a strengthened regulatory pledge on complex shopping malls the day before to promote coexistence with small and medium-sized businesses. From the urban planning stage, they plan to restrict the location of complex shopping malls and, similar to large marts, designate operating hour limits and mandatory closing days. The government already strengthened regulations on complex shopping malls last year. Previously, the government amended government directives to allow local government heads to block the opening of large retail stores. When opening large-scale stores such as large marts, department stores, and complex shopping malls with a total store area of 3,000㎡ or more, the scope of business types subject to surrounding commercial area impact assessments was expanded to include specialty retail sectors such as clothing, furniture, and toys.

An official from a retail company said, "The scope and intensity of retail regulations proposed by politicians are becoming increasingly severe," adding, "Strengthening regulations amid the management difficulties caused by COVID-19 is basically telling us to just die."

The Distribution Industry Development Act was enacted in 1997 to promote efficient development and balanced growth of the distribution industry while establishing a sound commercial order. At that time, it was created to ease various administrative regulations, such as converting the large-scale store permit system to a registration system and abolishing facility installation obligations. However, as it was used by the political sphere, since 2010, this law has been known as a regulatory law for the distribution market. Restrictions on the opening of corporate supermarkets (SSMs), operating hour limits for large marts, and mandatory closing days are regulations based on this law.

The main opposition party, the United Future Party, focused its pledges in this election on expanding corporate management freedom and proposed easing regulations on holiday operations of large marts, but the retail industry’s lukewarm response is due to this background. Most retail regulation bills were passed when the United Future Party was the ruling party. The designation system for traditional industry preservation zones was introduced in 2010 when Hong Joon-pyo, an independent candidate, was a senior member of the Grand National Party. Subsequently, in March 2012, retail regulation bills such as mandatory closing days and operating hour limits for large marts were quickly passed.

In fact, as many as 41 amendments to the Distribution Industry Development Act were proposed in the 20th National Assembly. There is even a bill in the National Assembly to increase mandatory closing days from twice a month to four times.

Professor Seo Yong-gu of Sookmyung Women’s University said, "Regulations on the distribution industry are being used for political populism and should be restrained," adding, "The current difficult situation of distribution companies must be acknowledged." He continued, "Regulations on offline retail businesses are out of step with the times," pointing out, "While the non-face-to-face market is growing and there are no regulations on the online market, pledges to strengthen regulations only on large marts are rather discriminatory."

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