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Seoul has been harrassing Costco
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Steelrails

Joined: 12 Mar 2009
Location: Earth, Solar System

Posted: Mon Oct 22, 2012 4:55 am Post subject:

dairyairy wrote:

if you want to have an active and healthy economy then you must offer consumers the best products at the lowest prices.

I disagree. Cheap commercial goods are not the heart of an active economy.

Gainful employment is. What good are $400/50 watt dollar stereos if one week's wages are 400 dollars? Better to have $450/45 watt dollar stereos offered on $900 dollar/week wages.

But I do agree that Costco is not the true villain in this. If the choice is Costco vs. Vic, then go with Costco. Costco is only doing what a Korean company wishes it could do. It's fair play. If you have Hyundais and Samsungs then there are going to be Costcos. That being said, do what it takes to maximize your market advantage.

But I do not agree with the premise that the value of an "equal market" is what a country should pursue in order to increase its citizen's prosperity. Neither markets nor corporations are about "fair", they are about maximizing their advantage as much as they can, and if there is a way to do it, even if it is moderately "unfair" (of course there are limits) is what they should do. You don't have a multibillion dollar company to be "fair". You have it to generate wealth.

dairyairy

Joined: 17 May 2012
Location: South Korea

Posted: Mon Oct 22, 2012 1:48 pm Post subject:

Costco is definitely helping the Korean economy by stabilizing prices, and by offering newer and foreign products Costco is introducing the Korean consumers to the outside world. That's not just a positive for the economy but is also a positive for Koreans culturally. Imagine that- a store that offers positive cultural exchange through foreign products, on Korean soil, and Koreans are flocking to it. Korean consumers realize that their market has long been much too overprotected. If the Korean market doesn't even produce pumpkin pies then why does the government want to do everything in its power to keep that piemaker out of the country? Well, at some point it becomes all about raw power and not just about protecting local producers.

Quote:

Costco is only doing what a Korean company wishes it could do.

Because Costco is the king when it comes to responding to their customers by offering products Koreans want like: pizza, muffins, and 100 calorie Swiss Miss frozen fudge bars. And why can't large Korean stores respond in the same way to their Korean consumers? Overregulation and overprotection by the Korean government that is done to keep prices high. What the Seoul government is doing against Costco will only prolong the problems for Korean consumers. Korean consumers are showing us their position in all of this by crowding Costco stores and buying up everything in sight.

Steelrails

Joined: 12 Mar 2009
Location: Earth, Solar System

Posted: Mon Oct 22, 2012 3:39 pm Post subject:

Quote:

Oh my word, get over it. You go into a Hyundai Dept. Store or Shinsaegae or Homeplus or EMart and you'll find a plethora of foreign products. I live in bumpkin ville and our off-brand local grocerhas a number of foreign products. If anything its the smaller stores that offer smaller sized items that people can purchase at lower cost before they go and buy in bulk. Unless I'm wrong and its standard consumer behavior for someone exploring a completely new product by buying in bulk. Never had granola bars? Why not start with a 5 kilo case of them for 40 bucks.

Costco introduces Koreans to the outside world as much as Ralph's or Kroger's does.

Quote:

Because Costco is the king when it comes to responding to their customers by offering products Koreans want like: pizza, muffins, and 100 calorie Swiss Miss frozen fudge bars.

I think this has more to do with distribution networks and being able to purchase from suppliers than conscious choices by Costco as to what to offer.

And I think you're a tad over-projecting your own tastes onto Koreans. Don't get me wrong, Costco offers plenty of products that Koreans want, but I think its more in the canned fruit, condiments, bulk grains and flour, and food supply stuff that goes into Korean food as you claim.

I have yet to see 100 calorie Swiss Miss fudge bars at my local super or offered as a dessert. I do see vast vats of Costco cooking oil and mayo.

Quote:

And why can't large Korean stores respond in the same way to their Korean consumers? Overregulation and overprotection by the Korean government that is done to keep prices high.

So because of overprotection from the Korean government, Korean companies can't offer favorable selections and prices on certain imported goods? Wouldn't such a government overregulate Costco while securing favorable terms for its own firms? Isn't the success of Costco due to a distinct lack of regulation and barriers to trade? Isn't the problem the fact that Costco seems to be exempt from the Sunday closing rule, unlike domestic firms?

Again, I think this has far more to do with distribution networks and prices from suppliers. Costco can purchase in bulk from suppliers in the US and then use its own distribution network to ship worldwide. A much smaller company such as E-Mart or Vic isn't going to be able to purchase at such a high quantity nor have as efficient a distribution network as Costco. It's not like some Korean executive is willfully choosing not to offer certain foreign products even though they are big sellers. It's the fact that they can't turn a profit off of selling them because they can't secure as low a price from the supplier nor ship it efficiently and then sell it at a competitive price.

EDIT- Isn't this not strictly a Korean vs. Foreigner thing? Isn't Homeplus (Tesco) complying with the Sunday shutdown?

Weigookin74

Joined: 26 Oct 2009

Posted: Mon Oct 22, 2012 5:12 pm Post subject:

Steelrails wrote:

Quote:

Because Costco is the king when it comes to responding to their customers by offering products Koreans want like: pizza, muffins, and 100 calorie Swiss Miss frozen fudge bars.

Quote:

And why can't large Korean stores respond in the same way to their Korean consumers? Overregulation and overprotection by the Korean government that is done to keep prices high.

Sometimes as a company you choose to offer things that you make low profit on to bring customers in the door and hope to sell other things that you can make a profit on too. I use to hear of some small stores selling milk at a slight loss for them because people came in and bought other things. It led to overall profit.

As for foriegn items sold in E Mart and others, I'm surprised that foriegn companies don't also pay to have reps give out samples. It may deplete their profits short term but it gives them access to the market. Everyone already knows what Mandu and ham tastes like.

dairyairy

Joined: 17 May 2012
Location: South Korea

Posted: Mon Oct 22, 2012 6:40 pm Post subject:

Quote:

Isn't the problem the fact that Costco seems to be exempt from the Sunday closing rule, unlike domestic firms?

Steelrails, are you reading the articles? The Sunday closing law has been ruled illegal by Seoul courts but the Seoul City government is still insisting that it applies to only Costco.

Quote:

So because of overprotection from the Korean government, Korean companies can't offer favorable selections and prices on certain imported goods?

That's right. That's why the FTA's have had to be negotiated.

Quote:

And I think you're a tad over-projecting your own tastes onto Koreans. Don't get me wrong, Costco offers plenty of products that Koreans want, but I think its more in the canned fruit, condiments, bulk grains and flour, and food supply stuff that goes into Korean food as you claim.

Many things fly off the shelves at Costco because of availability, (only available at Costco) and lower prices like: Tide laundry detergent, vitamins and supplements, soda, frozen goods, bakery items, cheese.

Costco has been a market leader and other stores know it. Don't believe it? You can look at how the prices and sales of pizza in Costco's food court has impacted all of the Korean stores in what they now offer and the prices. Remember, there are only 8 Costco stores in all of Korea.

As for the Swiss Miss frozen bars, they just appeared at Costco.

Mr. BlackCat

Joined: 30 Nov 2005
Location: Insert witty remark HERE

Posted: Mon Oct 22, 2012 7:48 pm Post subject:

Steelrails wrote:

Quote:

When I first got here, no store besides Costco offered anything foreign. The only cheese in Emart was that processed sliced stuff. No pop besides cider and coke. It was even hard to find spaghetti sauce and ketchup. This was in Seoul, and even the little marts in Itaewon that offered some of this stuff were just reselling it from Costco. I like to think the huge popularity of Costco influenced other stores' decision to stock some of these products today. I wonder if they would continue to do so if Costco was forced to leave.

Steelrails

Joined: 12 Mar 2009
Location: Earth, Solar System

Posted: Mon Oct 22, 2012 8:28 pm Post subject:

Quote:

Then if what you're saying is true, and that these products are being bought by Koreans for use in restaurants and the like, then shouldn't we see a corresponding increase in products featuring these things in Korean food.

It's Costco Corn Syrup in the ddukbokki, not ddukbokki being ditched in favor of burritos. Again, I think you're overemphasizing the impact of 'foreign' products in this and projecting your own tastes onto the reason for Costco's success. The main sellers for Costco aren't Tide, cheese, and Swiss Miss pops. It's flour, corn syrup, canned fruit, produce, eggs, etc. The foreign items certainly help, but I suspect that if you had one store selling exclusively "foreign" products and another selling standard groceries, the one selling standard groceries would be just as booming as ever and the other one would just be a niche store.

Again, I think you're projecting your personal tastes onto standard Korean shoppers.

Quote:

Steelrails, are you reading the articles? The Sunday closing law has been ruled illegal by Seoul courts but the Seoul City government is still insisting that it applies to only Costco.

Right, but as I said, isn't Homeplus a foreign operated firm (Tesco), and I'm presuming its a party to the suit, yet there is no complaint over it being open on Sundays. That being said clearly it is a shameless attempt to score cheap political points by a politician.

Quote:

That's right. That's why the FTA's have had to be negotiated.

So because of overprotection from the Korean government, Korean companies can't offer favorable selections and prices on certain imported goods?

Dude, you're not even making any sense. You're claiming that somehow Korean companies negotiated fair trade agreements so that Korean firms could import the same things, without duties from the Korean government, as Costco does, but Costco at the time was somehow exempt from all those duties and regulations that the Korean government forced on its own companies. And that all of this shows how the Korean government pursues protectionist policies against foreign firms?

I don't know which is more out of touch, your perception of the average Korean consumer or your views on trade.

Quote:

I like to think the huge popularity of Costco influenced other stores' decision to stock some of these products today. I wonder if they would continue to do so if Costco was forced to leave.

I have the feeling that 40+ years of the Korean diaspora, restaurants offering foreign fare in Korea and international travel had far more to do with driving consumer demand than some mythic Costco suddenly exposing the masses to cheddar cheese and pumpkin pie.

It's like me saying that Krogers exposed the people of America to Japanese food by stocking Sapporo Ichiban ramen noodles.

Quote:

As for foriegn items sold in E Mart and others, I'm surprised that foriegn companies don't also pay to have reps give out samples. It may deplete their profits short term but it gives them access to the market. Everyone already knows what Mandu and ham tastes like.

They're probably owned by some conglomerate. Why hand out samples of Jack Daniel's riblets when you can discount your staple products and get that market? That's what's going to get you long-term success, not a falsh in the pan of a FrankenBerry fad.

jdog2050

Joined: 17 Dec 2006

Posted: Mon Oct 22, 2012 8:38 pm Post subject:

Steelrails wrote:

Sorry, but they lost me at "Gestapo Tactics".

And shouldn't a country do its utmost to promote wealth generation by the citizens of the country, not supporting some abstract notion about "fair play in trade", even if that means unfairly penalizing foreign companies?

I don't want my government (American or Korean) to offer a level playing field in the name of somewhat cheaper consumer goods. I want it to offer an unlevel playing field to promote employment and wealth generation in my country of residence.

I'll start to cast stones at Korea over this the second people stop whining over China's unfair trade practices.

You should have read the whole thing. The guy was definitely over the top a little, but his points were completely valid.

The major problem with this, is that if the Seoul government wanted to help the small stores, then *help the small stores*. Seeing as the reasons for going to a small store verses a chain are completely different, they could have very easily created a program to help update the mom and pops, get them into the 21st century in terms of consumer needs, product placement, and new supply chains.

Instead, they chose to put limitations on businesses that suit a very different consumer need. Makes zero sense.

Steelrails

Joined: 12 Mar 2009
Location: Earth, Solar System

Posted: Mon Oct 22, 2012 9:22 pm Post subject:

Good point jdog2050. I don't disagree that it's a lame political stunt that does zero to solve the problem.

dairyairy

Joined: 17 May 2012
Location: South Korea

Posted: Mon Oct 22, 2012 10:01 pm Post subject:

Steelrails, again, I can tell that you aren't reading the articles posted in this thread. Costco in Seoul isn't just another store out there. With only three stores it's a spectactular success. The #1 Costco for sales, in the world, is in Seoul along with the top store for sales, for any chain in the world, for produce and pizzas. You keep minimizing Costco's impact on the Korean grocer/store market and it can be said that it has impacted Korean consumers a great deal because of product availability and prices. Costco is clearly the market leader, even with less than 10 stores nationwide. Those who understand business understand the impact of one store that can sell $446 million worth of merchandise in one year. It's all there for you. Read up and get back to me.

Mr. BlackCat

Joined: 30 Nov 2005
Location: Insert witty remark HERE

Posted: Mon Oct 22, 2012 11:27 pm Post subject:

Steelrails wrote:

Quote:

I like to think the huge popularity of Costco influenced other stores' decision to stock some of these products today. I wonder if they would continue to do so if Costco was forced to leave.

Ok, I think you're reading way too much into my comment. I was openly wondering, not making concrete points. However, since you've opened the can of worms...

You say all these things have existed for the last 40 years. Then why the sudden explosion of foreign food available in regular groceries around Korea? I got here in 2005, that's my reference point saying there was nothing of the sort at that time. Seven years later I can get feta in Emart and actual butter in my local grocery. This wasn't a gradual build up over 40 years, it's pretty sudden over the last 5 years or so. International restaurants were also heavily Koreanized before that (many still are, I'm not making a judgement call on it though). Furthermore, the small percentage of Koreans that actually do travel overseas still generally eat mostly Korean. (Yeah, yeah, you can argue that and tell me about this one guy, a friend of a friend you know, who this one time ate a taco in Mexico).

Again, I'm not saying only Costco caused the influx of foreign foods into the market over the last few years, or that it's the biggest reason. I'm just curious if you took it out of the equation what would happen to the selection in Emart and other places. Maybe not that much with the FTA now, but I still wonder. I also wonder why this offends your "Defend Korea at all costs!" sensibilities. It's like an American defending the Iraq war just because not doing so would be seen as 'unpatriotic'. It's ok to think for yourself, you know.

Steelrails

Joined: 12 Mar 2009
Location: Earth, Solar System

Posted: Mon Oct 22, 2012 11:44 pm Post subject:

dairyairy wrote:

Costco in Seoul isn't just another store out there. With only three stores it's a spectactular success. The #1 Costco for sales, in the world, is in Seoul along with the top store for sales, for any chain in the world, for produce and pizzas. You keep minimizing Costco's impact on the Korean grocer/store market and it can be said that it has impacted Korean consumers a great deal because of product availability and prices.
Costco is clearly the market leader, even with less than 10 stores nationwide.
Those who understand business understand the impact of one store that can sell $446 million worth of merchandise in one year. It's all there for you. Read up and get back to me.

I don't see too much to disagree with in your post, but nothing about what you wrote above supports your previous claims.

Yes, Costco is one of the market leaders in Korea. Yes, it has a significant impact.

That doesn't mean that that impact is due to the variety of foreign foods it carries. That doesn't mean that there Korea is engaging in full-blown protectionism.

It means Costco is effectve in terms of its suppliers and distribution network in providing cheap goods to Korea. Most of those goods have direct counterparts in Korea.

It's not because they have cheddar cheese. It's because they have cooking oil.

As for my claim that you're projecting your own preferences onto Korean consumers, here's a quote from you:

Quote:

I'll be the first one in the door at Costco next Sunday. I don't care how many protesters are outside. I want my bulgogi pizza and muffins the weekend after payday.

Quote:

Costco had the biggest sales of any Costco in the world last year, at an estimated $450 million. That's a lot of pizza and muffins.

No, it's not because of pizza and muffins. It's because of cooking oil, eggs, sugar, salt, mayonnaise, chicken, etc. Yes, much of that stuff is produced by foreign companies, but 'sugar' and 'salt' aren't really "foreign products".

Costco is great at offering those products at lower prices and good for them.

I agree that this is all a political stunt. I agree that mom and pop should modernize. I also agree that one duty of a country is to maximize what is best for its citizens and this isn't always through cheap consumer goods sold through stores operated by low wage staff. I agree that stores which are negatively affected by Costco can use any strategy they please in an effort to survive. I also agree that Costco can use its leverage to get what is best for it.

But I don't think Costco is where its at because of the muffins, pizza, cheddar cheese, pumpkin pies, Swiss Miss Pops and I don't think it is some sort of great ambassador of culture and cuisine. I don't see any of these products in great use by Koreans, save pizza. If these products are in such demand, shouldn't they be appearing all over in restaurants and hofs? Shouldn't I be regularly greeted with Costco muffins and Swiss Miss Pops, not rice cakes and red bean ice cream?

Again, you're projecting your own grocery shopping preferences and habits on your analysis.

dairyairy

Joined: 17 May 2012
Location: South Korea

Posted: Tue Oct 23, 2012 12:30 am Post subject:

Quote:

Again, you're projecting your own grocery shopping preferences and habits on your analysis.

I do include what draws me to Costco, including frozen chicken breasts, but it seems that, at this point, our "argument" has become a "Tastes great, less filling" kind of discussion about what makes Costco such an effective market force in Korea. You say it's because of Korean necessities, ("Tastes great"), and I say it's because of foreign goods and different strategies" ("Less filling") . Maybe it's both? Let's just agree that Costco is awesome.

Weigookin74

Joined: 26 Oct 2009

Posted: Tue Oct 23, 2012 4:06 pm Post subject:

http://nwww.koreaherald.com/view.php?ud=20121023000878 Many good points, though a couple of them I may not agree with. Costco is not a Chaebol. However, legal traditions may be different. Regardless, the government should not regulate private business like this.

dairyairy

Joined: 17 May 2012
Location: South Korea

Posted: Wed Oct 24, 2012 1:56 pm Post subject:

http://www.koreatimes.co.kr/www/news/nation/2012/10/117_123075.html

Quote:

Costco allowed to open on Sundays temporarily

By Kim Rahn

The Seoul Administrative Court ruled Wednesday that Costco Korea could temporarily open its stores on every Sunday.

It accepted the American wholesaler�s request to suspend the application of ordinances by three districts in Seoul, which call for the mandatory closure of discount stores every other Sunday.

The temporary measure will be effective until the court gives a final verdict on the legitimacy of the ordinances.

The ruling comes after Costco Korea filed a suit against the districts on Oct. 15 claiming the ordinances were invalid, as other Korean discount store chains did earlier.

�The application of the ordinances needs to be suspended to prevent damage to Costco. The suspension is also unlikely to harm consumer interest,� the court said.

If this is settled in Korean courts then we'll probably see these laws overturned.

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