Category: Korea-Business

Ultimately the coronavirus is going to be a good thing for big business that can survive the restrictions because many of their small business competitors are going under:

Small businesses are being devastated by the pandemic, with the mom-and-pops, restaurants, travel agencies and similar establishments going out of business at a rapid rate, according to recent statistics.    
   
The situation is set to worsen as the government over the weekend has extended the social distancing orders that have hit food-and-beverage outlets especially hard.      
   
Many small businesses were already on the ropes before the pandemic, and the crisis has made an already bad situation worse. Owners are becoming desperate, with at least one suicide being reported related to the financial stress faced by a small business operator.      
   
The number of small shops in Seoul dropped 5.4 percent in the second quarter when compared to the first quarter, according to a report by Budongsan 114 based on a study by the Small Enterprise and Market Service (Semas). The total reported was 370,321, meaning 21,178 small stores that existed at the beginning of the year are now gone.  
   
Over the same period, 10,040 restaurants went out of businesses, a 7.5 percent decline on quarter. The number of hair salons dropped by 3,473 stores, a 5.1 percent decline. In the travel agency, leisure and entertainment — which includes noraebang, or singing rooms — and computer cafe category, 1,260 businesses shut for good, a 10.8 percent decline. 

Joong Ang Ilbo

You can read more at the link.

It looks like the deal to acquire Asiana Airlines may fall through because of the ongoing pandemic:

Hyundai Development Company’s (HDC) planned takeover of Asiana Airlines appears to be on the brink of collapse, following the former’s official request for another round of due diligence on the cash-squeezed air carrier, aviation industry officials and analysts said Monday. 

HDC is putting the blame for the delay in negotiations on Kumho Industrial, which had decided to sell its airline unit, claiming that the latter has failed to send formal data related to the carrier’s financial status, despite repeated requests since early April.

This was seen by some industry officials as HDC making excuses in preparation for abandoning its planned acquisition of the indebted carrier, while others speculated that HDC may be moving to reduce the price.

Korea Times

You can read more at the link.

Will any ROK Heads be rushing to the store to buy this new Kellogg’s cereal?:

Kellogg Korea’s latest release, Chex Green Onion is stirring up the Internet even before hitting the shelves.

Kellogg Korea uploaded a 6-second-long video on June 17 on its YouTube channel, recruiting 50 people to try its newest product before its release. The video showed chopped green onion being sprinkled on chocolate flavored Korean cereal Chex with milk with background music with the lyrics “sorry, sorry, sorry” by trot singer Tae Jin-ah.

Korea Herald

You can read more about the cereal at the link.

This is a pretty prestigious recognition for Coupang:

Coupang is No. 2 on the 2020 CNBC Disruptor list.  
   
It is the first Korean company to make it onto the list, which has been published by the U.S. business channel since 2013. Coupang was also the first Korean company to be nominated.  
   
Each year, the broadcaster identifies 50 private companies with breakthroughs influencing business and market competition. All private, independently owned start-up companies founded after Jan. 1, 2005 were eligible to be nominated this year.  
   
Coupang was ranked No. 2 from a total 1,355 nominees selected by the station and a board of advisors.    
   
How the companies reacted to the coronavirus was key in the selection process this year. CNBC gave credit to the retailer’s fast delivery service, and its effort to replenish necessities, such as face masks and hand sanitizers, during the pandemic.    
   
The American broadcaster ranked Coupang high on the list considering its ability to withstand a rush of online orders during the virus outbreak while maintaining its quality delivery service. CNBC complimented the company for freezing the prices of face masks and hand sanitizers to prevent customers from being adversely affected by the disruption in the supply chain caused by the outbreak.    
   
Coupang said in a statement Wednesday that its vast logistics network and infrastructure it aggressively built in recent years may have helped it reach second place. The retailer claims more than 70 percent of the Korean population lives 10 minutes away from its “Rocket Delivery” logistics hubs.    
   
Coupang said it will continue to contribute to the fight against the pandemic. It created around 20,000 jobs in the first quarter in the face of a national unemployment crisis.   

Joong Ang Ilbo

You can read more at the link.

It looks like these luxury brands may be the next target of South Korean tax authorities as they finish with Starbucks:

The National Tax Service’s (NTS) special audit of Starbucks Korea could be a warning sign for other multinational corporations here suspected of tax evasion. 

The tax probe of the U.S. multinational coffeehouse brand seemed to be an irregular one that the tax agency could have launched against any firm operating in the country suspected of evading tax. 

The NTS has been probing offshore tax evasion since the beginning of this year, mainly targeting multinational tech companies and imposing 1.33 trillion won in penalties for tax evasion. Companies generating over 150 billion won in sales are subject to a special audit. 

In this case, luxury brands like Chanel and Louis Vuitton could also be targets. 

Korea Times

You can read more at the link.

The Moon administration needs money for all their lofty plans for North Korea, so this should be a warning to all international corporations operating in South Korea that the taxman is coming:

Starbucks Korea is being investigated over allegations of tax evasion, mostly via overpricing goods and services imported from its head office in the U.S., according to industry and tax administration sources, Thursday.

Officials from the National Tax Service (NTS) Seoul Office’s international trade investigation department have seized accounting records and data preserved online at the global coffee giant’s office in the capital, following multiple searches that began in mid-May.  

The Korean office allegedly sought to inflate the cost of raw materials such as coffee beans and others products for sale or needed for maintenance at its over 1,370 branches here, in what is widely known as “transfer pricing.”

Korea Times

You can read more at the link.

It will be interesting to see what the demand for travel is going to be in June:

Korean Air Lines Co., South Korea’s biggest carrier by sales, said Thursday it will reopen dozens of its international routes next month amid signs the coronavirus epidemic may have passed its peak.

Korean Air plans to resume flights on 19 international routes on June 1 as the country’s top flag carrier strives to offset a sharp decline in passenger travel demand with an increased demand for cargo deliveries, the company said in a statement.

Korea Times

You can read more at the link.

Asiana was already having a tough time financially before the current pandemic, it will be interesting to see if the airline is able to survive this:

Korea’s second-largest airline has indefinitely extended mass furloughs of its employees, requiring more than 8,000 workers to take unpaid leave 15 days each month as the carrier struggles to stay financially afloat.

Asiana Airlines announced Sunday that it would require all staff to take at least 15 days of unpaid leave during the month of May, and every subsequent month “until business normalizes.” Last month, it announced the same policy for April.

In an industry with massive fixed costs such as leased planes and airport fees, airlines have been struggling to keep their employees on the payroll as the coronavirus pandemic wreaks havoc on international travel. The number of travelers using international flights in and out of Korea during the first week of April has plummeted by 97 percent on-year.

Joong Ang Ilbo

You can read more at the link, but Asiana Airlines said the pandemic has caused 70% of their workforce to have nothing to do.

Not every industry is apparently suffering during the current coronavirus pandemic:

Despite the end in sight for the pandemic in Korea, some companies are jumping on the Covid-19 bandwagon, from conglomerates to underwear makers.

They are looking for the corona boom to continue, or to export to where the outbreak is not yet under control. 

Some are hoping that outbreak-related products, such as masks, become more permanent accessories in our wardrobes and style will become as important as function.

The trend is especially evident in the apparel industry, which has been struggling as the business has been weak for some time.

LF’s Hazzys in late March released a mask with a replaceable filter. 

Joong Ang Ilbo

You can read more at the link.