"When Daiso Hits 3 Trillion in Sales, Stationery Stores Close One After Another"...Attempt to Designate as Livelihood-Type Industry

Dongbanwi to Hold Plenary Session on 25th for Deliberation and Resolution
"Protect Signboard Industry" Opinion Delivered to Ministry of SMEs
Disinfection Business Recommended as SME Suitable Industry

A plan is being promoted to designate the stationery retail industry, which was hit hard by the COVID-19 crisis, as a livelihood-type suitable industry for small business owners (hereinafter referred to as livelihood-type suitable industry).

On the 25th, the Win-Win Growth Committee held a plenary session at the JW Marriott Hotel in Seocho-gu, Seoul, where it recommended the disinfection service industry as a suitable industry for small and medium enterprises (SMEs) and decided to deliver a recommendation letter to the Ministry of SMEs and Startups to designate the stationery retail industry as a livelihood-type suitable industry.

First, the Committee resolved to recommend the disinfection, pest control, and extermination service industry (disinfection service industry) as a suitable industry for SMEs. For the next three years, large corporations should refrain from entering this market. Existing large corporations should also refrain from expanding their business areas in the mandatory disinfection market for the public sector and apartment complexes with more than 300 households. Companies such as Lotte Hi-Mart, Samyang International, ESTEC System, CAPSTEC, Hanssem Development, HDC Labs, and KT Service South are subject to this recommendation.

The Committee recommended forming a win-win cooperation council between large and small-medium enterprises to establish a fair market order and to discuss support measures such as the development of necessary chemicals and equipment and service education for win-win cooperation. 'Cesco,' which has grown from an SME to a mid-sized company specializing in disinfection, is excluded from the expansion restraint but will participate in the cooperation council. There are about 4,000 specialized SME disinfection companies nationwide. The designation as a suitable industry for SMEs will be maintained for three years.

The stationery retail industry, which was hit hard by the COVID-19 crisis, will be recommended to the Ministry of SMEs and Startups for designation as a livelihood-type suitable industry. The Ministry’s review committee must make a final decision on the designation by the end of October at the latest. The committee plans to comprehensively consider the actual conditions of the stationery retail industry, stakeholder opinions, consumer welfare, and industrial impact.

Earlier, the Korea Stationery Distribution Cooperative submitted a request for recommendation as a livelihood-type suitable industry to the Win-Win Growth Committee in July last year to protect small stationery retailers and block the indiscriminate market expansion of Daiso and large marts. Jang Nak-jeon, the cooperative director, stated, "There are about 9,000 offline stationery stores currently operating nationwide," adding, "About 500 stores close every year." On the other hand, Daiso’s sales last year were about 2.95 trillion won, a 13% increase compared to the previous year.

The livelihood-type suitable industry was introduced to prevent large corporations from expanding their businesses indiscriminately and encroaching on neighborhood markets and the domains of small business owners. Unlike the SME suitable industry, which is a voluntary regulation between large and small-medium enterprises, the livelihood-type suitable industry is regulated by law. During the designation period, large corporations are prohibited from acquiring, starting, or expanding the relevant business, and violations are punishable by imprisonment of up to two years or a fine of up to 150 million won, along with enforcement penalties. Designation as a livelihood-type suitable industry provides protection for five years. Industries previously designated as livelihood-type suitable industries include tofu and fermented soybean product manufacturing, vending machine operation, and LPG fuel retail.

A representative from the Win-Win Growth Committee stated, "During the opinion-gathering process such as TF meetings involving large and small-medium enterprises related to the stationery industry, a consensus on a win-win agreement was formed, and we are exploring additional measures such as voluntary win-win cooperation together with the Committee."

Oh Young-gyo, chairman of the Win-Win Growth Committee, said, "With the ongoing interest rate inversion between the U.S. and South Korea and a 12.6% decrease in exports in the first quarter compared to last year, the reality of our economy is challenging." He added, "If many companies actively participate in the Committee’s new win-win growth policy, we will be able to overcome the current difficulties together."