Homeplus chief’s remarks against SSM regulation get mixed reaction

Major discount store chains oppose rules that limit business hours


A sharply worded remark by the chief of the nation’s second largest supermarket chain against politicians over the regulation of the retail giants’ business hours aroused mixed views across the industry Wednesday.

The central and local governments are pushing for banning large retail outlets’ activities from midnight through 8 a.m. and making them close for a day or two a month under a law that passed the National Assembly late last year.

Lee Seung-han, chief executive of Homeplus, slammed the regulation of “super supermarkets” during a press conference on the company’s social contribution plans Monday evening.

“The Korean economy is like a watermelon. It claims market economy on the outside, but is red in the inside,” Lee said. “Government measures to support the low-income people could backfire against them.”

Lee Seung-han

Calling the government regulations “anti-working class populism” and “a policy that not even communists would adopt,” Lee said limiting the business rights of SSMs would deprive the people of the opportunity to buy good products at low prices.

The Korea Chainstores Association filed a constitutional appeal and an injunction for the revocation of the law and Jeonju city government’s ordinance two weeks ago.

Six major discount stores and their affiliated supermarket chains began a signature-collecting campaign last week against the regulations. The Seoul City Council on Monday approved an ordinance that allows the mayor to recommend SSMs close between midnight and 8 a.m. Several other local governments such as Gangneung, Wonju, Jinju and Iksan are reviewing adopting the same ordinance.

Some in the retail industry were concerned Lee’s comments could further provoke small shop owners as regulations against conglomerates gain strength ahead of the parliamentary elections in April.

“Now seems to be a time for caution,” an official at a rival retailer said.

“There is no need to make provocative remarks when (society) is critical of large supermarket chains.”

Others say they view Lee’s comments as valid, especially because he was representing the position of U.K.’s Tesco, the major shareholder of Homeplus.

“I agree with every single word Lee said,” said a fund manager at a foreign asset management company investing in the local retail sector.

“Instead of fixing chaebol’s manipulation of the law to transfer wealth to their children, for example, the government’s latest regulations against conglomerates seems to restrict consumer rights. This might help politicians ahead of the elections, but in the long term would only aggravate Korea discount,” or foreign investors’ undervaluing of Korean stocks.

Some retail industry officials expressed unease at Lee’s comment that Homeplus “only entered main streets, not side streets.”

Homeplus started an emotional battle with the city government of Cheongju, North Chungcheong Province, in 2009 as it refused to accept the locals’ request to stop operating its outlet around the clock.

The citizens of Cheongju boycotted Homeplus and filed an appeal to a government agency for readjustment of SSM businesses.

In December last year, Homeplus opened convenience stores named 365 Plus in several locations in southern Seoul, stoking controversy over whether they were convenience stores or “mini-SSMs.”

The Unified Progressive Party on Wednesday refuted Lee’s remarks in a statement, referring to systematic control of large stores’ opening hours in the U.K., Germany and France.

The U.K. and Germany prohibit retail giants from doing business on Sundays and after 10 p.m., the UPP said. In France, opening a large supermarket requires the approval of a committee of local tradespeople.

“Korean society had been paradise for large supermarkets before the revision of the distribution industry development law,” the UPP said.

“Reckless opening of hypermarkets and their aggressive management resulted in excessive labor of sales workers and the collapse of small business owners.”

By Kim So-hyun (sophie@heraldcorp.com)