Noodle and Naengmyeon Manufacturing Industry Faces 5-Year Restriction on Large Corporation Entry

Designation of Noodle and Naengmyeon Manufacturing as Livelihood-Suitable Industry
Exceptional Approval Applied Considering Protection of Small Business Owners and Industrial Impact

[Asia Economy Reporter Kim Cheol-hyun] The noodle and naengmyeon manufacturing industries have been designated as livelihood-type suitable industries, restricting large corporations from entering the market for the next five years. The Ministry of SMEs and Startups (Minister Park Young-sun, hereinafter referred to as the Ministry) held a Livelihood-Type Suitable Industry Deliberation Committee and announced on the 17th that 'noodle manufacturing' and 'naengmyeon manufacturing' have been designated as livelihood-type suitable industries.

Accordingly, from January 1, 2021, large corporations and others are, in principle, prohibited from acquiring, starting, or expanding the designated businesses for five years, except for exceptional approvals under the designation notice. Violations may result in imprisonment for up to two years, fines up to 150 million KRW, and enforcement charges up to 5% of the violating sales.

Noodles and naengmyeon are traditional small business production items. Some small business owners have grown into SMEs by responding to market demand changes, but many still remain in fragile business environments with low sales and operating profits. In particular, with the recent growth of the noodle and naengmyeon convenience food market, large corporations equipped with capital and technology are expanding their business areas in this market, while the small business-operated raw noodle market is relatively shrinking, exacerbating difficulties. Therefore, the Deliberation Committee recognized the need to stably protect small business owners engaged in noodle and naengmyeon manufacturing from large corporations' market expansion and resolved to designate these two industries as livelihood-type suitable industries.

However, considering the main market of small business owners, the scope of noodle manufacturing was limited to fresh noodles and dried noodles. Also, taking into account the creation of new demand markets and the impact on the growth of related industries, a clause was established to exceptionally allow large corporations to expand their business in both noodle and naengmyeon sectors. Accordingly, production and sales are not restricted when producing noodles and naengmyeon as intermediate materials for noodle convenience foods (HMR). Furthermore, considering the characteristics of noodle manufacturing, production and sales up to 110% of the maximum production and shipment volume are permitted regardless of changes or expansions in workplaces or production facilities, and for small and medium-sized enterprises' original equipment manufacturing (OEM) orders, production up to 130% of the maximum OEM performance is allowed.

Park Sang-yong, Head of the Win-Win Cooperation Support Division at the Ministry, said, "With the recent downturn in the dining industry due to COVID-19, the difficulties of noodle manufacturing small business owners who mainly supply restaurants have also increased," adding, "We expect that this designation as a livelihood-type suitable industry will help noodle manufacturing small business owners operate their businesses more stably."

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