Small Business Association "Discussion Needed on Enacting Online Distribution Industry Development"

[Asia Economy Reporter Kim Jong-hwa] The Korea Federation of Micro Enterprise (KFME) stated that "the squeezing of manufacturers and distributors by online channels is a serious situation" and urged, "The government and the National Assembly should discuss the enactment of the Online Distribution Industry Development Act."

On the 27th, KFME said in a commentary, "The upgrade to social distancing level 2 due to the novel coronavirus infection (COVID-19) has once again turned the survival of micro enterprises red," adding, "The hope that the COVID-19 situation would be resolved soon has disappeared, and we are falling into another endless bleak situation."

While micro enterprises mainly engaged in offline business are pushed into a position of worrying about survival, the online distribution market is booming. According to data from Statistics Korea and media reports, the domestic online shopping market, which was worth 94 trillion won in 2017, grew to 135 trillion won last year, and is expected to reach 160 trillion won this year, benefiting from the COVID-19 special demand. It is also forecasted to approach a 50% share of the entire distribution market for the first time ever.

KFME stated, "For micro enterprises barely maintaining their presence in the overall offline market, squeezed by large supermarkets, department stores, and semi-large marts, the rapid expansion of online channels is seriously threatening their position in the distribution market."

In particular, they pointed out, "The current distribution method of online channels, which forces manufacturers and distributors to participate in lowest-price bidding, bypassing offline distribution stages, is triggering a self-destructive competition," adding, "As shown in cases like the famous online shopping mall Coupang, although sales increase, deficits only grow, creating an economic structure where everyone suffers."

Therefore, KFME emphasized, "The expansion of online distribution channels means a crisis for the millions of micro enterprise workers in the distribution industry and their families, and it signifies a crisis for the livelihood economy," and stressed, "Now is the time to discuss the enactment of the Online Distribution Industry Development Act."

KFME also said, "In reality, the expansion of the online market stems not only from its convenience but also from the lowest-price sales that squeeze micro enterprises and small and medium-sized enterprises," and urged, "A law is needed to control various unfair practices such as the indiscriminate squeezing of manufacturers and distributors by online channels, and the government and the National Assembly should undertake detailed status assessments and prepare countermeasures through discussions on the enactment of the Online Distribution Industry Development Act."

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