Decision on curbing new bakeries delayed

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Decision on curbing new bakeries delayed

A move to block franchise bakery chains like Paris Baguette and Tous Les Jours from opening new branches has been delayed, meaning they are still free to encroach on the territory of smaller rivals.

The National Commission for Corporate Partnership (NCCP) said yesterday that it will postpone designating the bakery industry as a small and medium enterprise (SME) industry for at least a month.

If it receives this designation, larger companies and chains would have to abide by restrictions curtailing their expansion, with prohibitions applied to how many new stores they can open within a certain radius of pre-existing outlets.

At the body’s 20th plenary meeting held at a hotel in Seoul yesterday, NCCP Chairman Yoo Jang-hee discussed which service sectors were being considered for this designation but held off on making a final decision.

The commission said in July it would release a list before the year’s end.

“It is taking much more time to build a consensus than we expected as the service sector, unlike the manufacturing industry, is intricately tied to the different interests of a range of stakeholders,” he said.

“Rather than rushing into a decision just to meet the deadline, we decided to give it another month to try and reach a social consensus.”

The fate of 11 service sector industries hangs in the balance but the bakery industry is by far the highest profile given all the press the issue has garnered this year, with a number of chaebol scions giving up their bakery businesses under strong public pressure and criticism of conglomerates’ greed.

The Korea Bakery Association, an umbrella group that represents small bakeries, filed a petition with the NCCP asking for bakeries to be included on the list.

It said large corporations like SPC Group, which operates Paris Baguette, and CJ Foodville, which runs No. 2 chain Tous Les Jours, have been unfairly eating into the profits of smaller rivals and mom-and-pop stores by being allowed to open new stores at an aggressive pace.

Since then, the commission has sent a proposal to large companies asking them to refrain from expanding. It suggested they limit new openings to less than 2 percent of the number of their current stores, among other measures, but so far the various parties have failed to find a common ground.

CJ Foodville, which has fewer stores than Tous Les Jours, has agreed to apply the brakes but SPC Group is not backing down.

Meanwhile, a backlash from Paris Baguette franchisees has also been growing in strength. They visited the commission on Wednesday and two weeks before to protest the move to limit their operations.

By Kim Jung-yoon []
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