Promotional Competition Between Hyundai and Samsung Heats Up Even Before Contractor Announcement
Tours of Completed Reconstruction Projects for Union Members Also Under Scrutiny
No Clear Standard on When Individual Contractor Promotions Are Prohibited
Gangnam-gu Begins Preparing Separate Guidelines for Individual Promotions
As Samsung C&T and Hyundai E&C began early promotional activities ahead of the selection of a contractor for Apgujeong District 2 next month, the Seoul Metropolitan Government has issued a warning. It is expected that so-called "bus tours," in which contractors take union members to visit their completed complexes, will also be included in the ban on early promotional activities.
Seoul City: "Refrain from Early Promotional Activities"
According to the maintenance industry on the 16th, Seoul City summoned the union of Apgujeong District 2 and the responsible officials from both companies earlier this month. At this meeting, the city conveyed concerns about excessive promotional competition between the two companies and requested that the selection process be conducted fairly. The city also sent an official document to Gangnam-gu, asking for special monitoring of individual promotional activities. As the public support agency for the Apgujeong District 2 maintenance project, Gangnam-gu is preparing guidelines related to the prohibition of early promotions.
Apgujeong District 2 is the first maintenance project site to emerge from Apgujeong, the most affluent neighborhood, and is highly sought after by Samsung C&T and Hyundai E&C, which rank first and second in construction capability evaluations. The total project cost is estimated at 2.4 trillion won.
Contractors aiming to win the maintenance project have been engaging in promotional activities targeting union members even before the bidding process begins. The union plans to announce the contractor selection notice on the 18th of next month and to hold a general meeting to select the contractor at the end of September, but the promotional battle is already heating up. Earlier this month, Samsung C&T opened the "Apgujeong S.Lounge" across from Apgujeong Apartment, where it is promoting its brand, introducing a model of the complex, an outline of the design, and its future vision. Currently, only pre-registered visitors, such as union members, are allowed to enter.
Hyundai E&C is also introducing new technologies to union members at the DH Gallery located in Sinsa-dong, Gangnam-gu. Hyundai E&C has applied for trademarks such as "Apgujeong Hyundai" and "Apgujeong Hyundai Apartment," emphasizing its brand and historical significance while expressing strong intent to win the contract.
Introducing Completed Complexes Considered "Individual Promotion"
In particular, both companies are conducting tours for union members to visit their completed reconstruction projects. By showing actual completed complexes, they allow union members to envision the changes that could take place after the maintenance project.
However, Seoul City and Gangnam-gu believe that such activities could be seen as violations of the relevant guidelines. They consider tours for union members conducted before the bidding announcement as "individual promotion." In some unions, the contractor promotion guidelines and compliance pledge explicitly state that it is prohibited to visit permanent housing exhibition centers, completed complexes, or model houses of other complexes accompanied by promotional staff or employees.
Article 15 of the Seoul City public-supported maintenance project contractor selection criteria stipulates that "construction companies, promotional agencies, and their employees are not allowed to conduct individual promotional activities targeting union members." Article 10 also contains a sanction clause stating that "if individual promotion or the provision of gifts is detected even once, the contractor's bid will be invalidated." A Gangnam-gu official stated, "Tours of completed complexes are a cost-effective way to promote, but I think contractors should refrain from competing to conduct union member tours and similar activities."
On the other hand, both companies and the construction industry view these activities as promotional actions that do not violate the criteria. The current contractor selection standards do not clearly specify the timing for the prohibition of individual promotions. Since construction companies are usually required to sign a compliance pledge regarding promotional guidelines after the union's contractor selection notice is issued, there is effectively no regulation prohibiting tour activities before the announcement. An industry official argued, "It is reasonable to interpret the ban on individual promotion in the Seoul City maintenance project contractor selection criteria as an obligation that arises at least after the bidding announcement."
In this regard, Gangnam-gu is preparing separate guidelines for individual promotional activities such as bus tours. Previously, in September last year, Gangnam-gu signed a win-win agreement with eight construction companies, including Samsung C&T and Hyundai E&C, to prevent unfair competition and excessive promotional activities and to advance the culture of winning maintenance projects.
A Gangnam-gu official said, "According to the legal advice we received from the city, there is a provision stating that promotional activities conducted before the first announcement should also be considered early promotional activities, so we will establish standards related to this and announce them soon."
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