Restrictions on Store Openings and Interference in Closures... Distribution Industry Caught in a Dilemma

21st National Assembly Distribution-Related Bills
Focus on Offline Store Regulations
Criticism Over Unemployment Concerns When Stores Close

Falling Behind in Competition with E-commerce
No Regulations on Online Market
Industry Calls for "Same Regulations for Online and Offline"

[Asia Economy Reporter Lim Hye-seon] "On one hand, they restrict store openings to protect small business owners, and on the other hand, they don't allow store closures because it supposedly harms the local economy."

An executive at a distribution company sighed as he said this. Distribution companies operating offline stores such as large supermarkets and shopping malls are caught in a dilemma where both opening and closing stores are difficult.

21st National Assembly, Regulations Immediately After Opening

According to the National Assembly Legislative Information System on the 12th, a total of three amendments to the Distribution Industry Development Act were proposed as member bills in the 21st National Assembly. All of them contain regulations targeting large distribution companies operating offline stores. The amendment proposed by Assemblyman Eo Gi-gu of the Democratic Party on the 10th includes measures to strengthen restrictions on store openings. It changes the Distribution Win-Win Development Council into a deliberation committee and grants the right to review and decide on regional cooperation plans when opening large-scale stores. If the deliberation proposal is rejected, the registration of the large supermarket can be canceled entirely. This is similar in context to the amendment proposed by Assemblyman Lee Ju-hwan of the United Future Party on the 8th. The main content is to mandate win-win cooperation plans with small and medium distribution companies when opening stores, and if the implementation performance is deemed insufficient, to publicly announce the targets and details of improvement recommendations and order compliance.

Assemblyman Lee Jang-seop of the Democratic Party also proposed an amendment to extend the expiration date of the provision in the Distribution Industry Development Act, which expires this year, that restricts the opening of large supermarkets and corporate-type supermarkets within 1 km of traditional markets in traditional commercial preservation zones until 2025. A distribution industry official said, "If you open a shopping mall, hastily formed interest groups spring up like mushrooms, and it means you have to give win-win support funds to all of them to open a store," adding, "The distribution industry's dominance has long shifted to the e-commerce market, and offline growth has stopped, but the National Assembly is still debating store opening regulations, which is regrettable."

Tearful Restructuring and 'Eat-and-Run' Criticism

Offline distribution companies have been pushed to the brink of survival due to distribution regulations, the onslaught of e-commerce, and the COVID-19 pandemic. However, closing stores at will is also difficult. The political sphere, concerned about the local economy and mass unemployment, criticizes them as 'eat-and-run' for neglecting social responsibility.

Homeplus is pushing for the sale of its Dunsan branch in Seo-gu, Daejeon, Ansan branch, and Daegu branch. The number of directly and indirectly employed people at the Dunsan and Ansan branches is about 800 each. Accordingly, Kim Cheol-min, a Democratic Party assemblyman representing the Ansan area, stated, "Homeplus should not engage in 'eat-and-run' by neglecting social responsibility," and added, "If the surrounding environment and landscape are damaged during the sale and development process, it will not be tolerated." Lotte Shopping is also closing about 120 stores within the year, including five Lotte Department Store branches and 16 marts. After closing Lotte Mart Yangju Cheonan Asan branch, they will close Big Market Shinyoungtong branch, Big Market Kintex branch next month, Cheonan branch, and Uijeongbu branch. Regarding employment, they plan to relocate employees to nearby stores as much as possible. A distribution industry official pointed out, "They restricted store openings to protect small business owners, and now if they interfere even with store closures, it means they want mutual destruction."

Regulating Online and Offline on the Same Level

The distribution industry is raising its voice to reflect 'reality.' Offline stores have long lost their competitiveness. The competition for market share between small business owners and offline stores is practically meaningless. Various government distribution regulations, such as mandatory closing days, have continued for eight years, making it impossible for offline companies to even hold weapons to compete with e-commerce companies. There are no regulations related to the online market.

A distribution industry official said, "Online and offline should be regulated on the same level," and argued, "Asymmetric regulation weakens offline competitiveness." He added, "The victims of the shortsighted regulatory policies of the political sphere will ultimately be small and medium-sized partner companies, small business owners, and consumers."

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