One day in 2017, shortly after the Moon Jae-in administration took office, a small business owner visited Chung Yong-jin, Vice Chairman of Shinsegae, with difficulty. Running a small catering company with sales of around 30 billion won for 20 years, he cautiously asked if there was any intention to open the E-Mart employee cafeteria to outside vendors. After listening for a while, Vice Chairman Chung gave an unexpected answer on the spot. "(Even large corporations that practically monopolize the catering business) should compete through bidding. If you happen to win the bid, please make sure to tell us that our employees are eating better quality food and that their meals have become tastier."
The small catering company, which was pushed to the brink of crisis, leveraged its 20-plus years of experience and began cooking daily at the employee cafeterias of three E-Mart stores from early the following year. Thanks to positive feedback internally, the number of E-Mart stores exclusively served by the catering company increased to 21, marking a true revival. This is a rare case of win-win cooperation in the catering market, which is usually dominated by the top five large corporations. It is reported that Vice Chairman Chung later opened additional employee cafeterias to small and medium-sized enterprises of similar scale. Recently, at the Fair Trade Commission’s announcement of opening cafeteria contracts with eight large corporations, Shinsegae stood out as a case where proactive efforts have belatedly shone. Unlike other large corporations, Shinsegae has already opened 42 business sites (21%) to small and medium-sized enterprises.
Despite various controversies, Samsung was the first to announce a bidding notice for employee cafeterias and select external vendors, but the aftermath feels unsatisfactory. Samsung Electronics claims to have selected fairly through a three-step process including presentations (PT), on-site inspections, and blind tastings, but ultimately, the volume was allocated to large and mid-sized companies. Because it was a designated bidding, companies not chosen by Samsung could not participate at all, and not a single small business passed the first PT stage. Samsung Electro-Mechanics recently set a participation condition requiring vendors to serve more than 3,000 meals per day at a single site over the past two years, which was a high barrier for small businesses. Samsung Display also allowed only large and major mid-sized companies to participate in the PT, resulting in a three-way competition among Dongwon, Shinsegae, and CJ. Although it appeared to adopt a competitive bidding method instead of direct contracts, the structure inevitably concentrated work orders within a specific group.
There are various complex causes behind this, but it cannot be denied that the process is moving in a direction different from the Fair Trade Commission’s intention to create new business opportunities for small and medium-sized enterprises and small business owners. A CEO of a small catering company expressed frustration, saying, "When you go to the bidding site, you can feel from the start that it is an unfair battlefield. There is no reason why a small business that has been seasoned in catering alone cannot handle 3,000 or even 10,000 meals, but the atmosphere is to exclude them first." Nevertheless, there is merit in the argument that if the inherent limitations of small businesses are not trusted, large corporations should not just shout slogans about coexistence but take an attitude of becoming a reliable ladder for each other to solve problems.
There is much gossip about whether the Fair Trade Commission is meddling even in the large corporations’ lunch bowls. Some public opinion links this to a rebellion of the MZ generation. If this opening of large corporations’ catering contracts is approached from the perspective of ‘win-win’ between large and small-medium enterprises, like Shinsegae’s precedent, so that it can be evaluated in the future as the starting point of structural change rather than a one-time event, it might create a new groundbreaking case.
Kim Hyewon, Deputy Head of the Industry Department, Asia Economy
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