Big bakeries can set up shops near local stores

Industry

Published: 23 Feb. 2016, 20:45

Big bakeries can set up shops near local stores

The government has eased regulations banning conglomerates from setting up local stores in hopes of protecting smaller neighborhood businesses as part of the shared growth agenda set up several years ago.

Large-business backed bakeries such as the biggest bakery chain owner SPC Group’s Paris Baguette or CJ Foodville’s Tous Les Jours can now open their stores near smaller independent bakeries in new towns starting next month.

The Korea Commission for Corporate Partnership on Tuesday said it was lifting the current regulations that ban large-company backed bakeries from setting up stores within 500 meters of an independent small-size local bakery. It also limited the number of new branches of large bakeries to under 2 percent of the existing branches a year.

However, for these large bakeries to open up shops, the new town - which needs to have more than 3,000 residential units - needs to meet the requirements of Ministry of Land, Infrastructure and Transport.

The previous regulation was first set in 2013 as large bakeries were aggressively setting up new shops every day, raising competition and forcing independently run neighborhood bakeries out of businesses.

There are a total of 1,285 Tous Les Jours and 3,316 Paris Baguette stores as of the end of 2015, which haven’t really changed since the regulations were set in two years ago.

The KCCP’s decision to ease up on the regulations comes as the large Korean bakeries are struggling with the sudden entry of major foreign bakery shops including those from Japan. Additionally the government hopes the move will help large Korean bakeries to further expand in the global market.

“We are expecting the KCCP’s decision will help us to improve our business as a whole and to enter foreign markets,” said Lee Hwa-sun, a manager at CJ Foodville.

Chang Seung-hoon, a manager at Paris Baguette, said, “We have longed for the KCCP to lift the ban at least on newly-developed towns.”

However, small business owners don’t welcome the decision. “Small bakeries might have to close down their businesses,” said Lim-Jae-ho, a board member of Korea Bakery Association. “The number of small-sized bakeries rose 10 percent during the three years of the ban, but now I worry that they might struggle after the distance regulation is eased in certain areas.”

By LEE HYUN-TAEK, KIM YOUNG-NAM [kim.youngnam@joongang.co.kr]