[In-Depth Review] Distribution Policy Needs Shift to Coexistence Policy Rather Than Regulation

As the COVID-19 pandemic continues, the distribution industry has entered a new turning point. Traditional offline distributors are facing new challenges of restructuring due to declining sales. Online distributors are entering a new phase of growth and investment. Additionally, with the integration of Fourth Industrial Revolution technologies into the distribution industry, unmanned sales, live broadcasting, robot-automated logistics systems, and delivery using drones and autonomous vehicles are rapidly expanding.

Artificial intelligence (AI) guides the distribution industry by analyzing changes in sales patterns by time zone to implement appropriate strategies. Information has emerged as a key factor in competition. This is why fierce cooperation and acquisitions among companies to secure and share customer information have intensified.

Distribution consists of large distributors, which are like the aorta in the human body, and small and medium-sized enterprises (SMEs) and small merchants, which are like capillaries. If either the aorta or the capillaries fail, a human dies. Life cannot be sustained by just one alone.

So far, Korea’s distribution policy has focused almost exclusively on the survival of small merchants and SMEs, which correspond to the capillaries. The National Assembly has been continuously introducing new regulatory bills related to SME distribution policies. Legislative proposals such as banning large marts within a 20 km radius of traditional markets are representative of extreme bills.

If such bills are enacted, large marts will not be allowed in small cities with populations under 50,000. This will cause inconvenience to consumers, reduce jobs, and halt deliveries from cooperating SMEs and farmers.

The extreme proposals by lawmakers are motivated by regional electoral considerations. Behind this is the political conviction of the Moon Jae-in administration’s distribution policy goal: "to ensure that marginalized groups no longer shed tears." The public does not deny this political conviction either. The problem lies in the method. Policies must be shifted in a direction that does not resist innovation while considering the conditions of the times.

Instead of blocking large corporations, it is necessary to support small merchants in utilizing AI to expand their sales channels. The budget for supporting SMEs in distribution is relatively minimal compared to other policies, and although it is diverse like a comprehensive gift set, the support is not well connected and is drifting.

Choosing and concentrating on infrastructure is also an important issue. Establishing and utilizing specialized financial support systems for small merchants and regional distribution and logistics centers is an urgent policy task. Policy support that only expects government aid for small merchants should not continue. The survival of small merchants who fail in competition should be addressed from a social welfare perspective.

The current laws regulating offline distributors can no longer control the distribution industry. An economy that hinders innovation is doomed to perish. The government should establish fair trade order and market competition policies suitable for the new digital distribution environment rather than regulations that go against the times. SMEs, small merchants, and large distributors should move toward innovation that fosters coexistence and cooperation rather than competition. At this time, the industrial competitiveness that Korea’s distribution industry has built so far will be strengthened, consumer convenience will increase, and our economic society will be able to sustain growth.

Kim Ik-seong, Professor at Dongduk Women’s University and Honorary President of the Korea Distribution Science Association

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