Uphill battle

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Uphill battle


Yi Jung-jae
The author is a columnist of the JoongAng Ilbo.

I had the opportunity to watch a 13-minute video recording of a parliamentary hearing on state affairs last month. Loud outbursts came from an entrepreneur summoned to a the hearing by the National Assembly industry and trade committee. He was Hong Seong-yeol, CEO of Mario Outlet based in the former Guro textile factory district in western Seoul. He said he had a lot to say about the Korea Industrial Complex, a state enterprise devoted to the promotion of industrial parks across the country.

Hong established the country’s first outlet malls, in the Guro factory district, which later became the Seoul Digital Industrial Complex in 2001, and over the last 20 years, he complained he had been summoned to the parliamentary questioning four times and complied twice. He has to idle a 9,900-square-meter (106,563-square-foot) space from the fifth to 12th floor for a year now because the state corporation bans renting factory buildings for warehouse purpose. He has been fighting with the state corporation for 15 years because it threatens to cancel their lease contract for breaking the law (by using the space for storage). The law made in the 1960s is useless as it disallows practically everything, he said.

The grayed businessman’s voice became louder in the video. “Who can do business in this country? I can’t. I shake with rage at the thought.” I met him for tea earlier this month. He was still fuming.

“The Guro factory became barren in the late 1990s after textile makers went down one by one and closed factories. Worse, Korea’s first bailout crisis came in late 1997. Its first-ever industrial complex was dying. Names like Jindo, Jean Pierre, BYC and Segye conducted fire sales on their inventory. Sale of the factory products on the site was illegal, but the companies facing a bankruptcy had no other choice. I got my idea there. I established a fashion and apparel outlet,” he recalled.


Hong Seong-yeol, CEO of Mario Outlet, donates 3 billion won ($2.54 million) for the construction of the Geppert-Nam Duck Woo Hall at Sogang University in 2017. He complained about the stifling regulations by the Korea Industrial Complex, a state enterprise devoted to promotion of industrial complexes across the country. [JOONGANG PHOTO]

His business plan worked. After Mario Outlet opened in 2001, tenants returned to the district. The government renovated the site into an IT-focused industrial park. “I take pride in reviving the industrial site from the graveyard and beefing up consumption.” Over 10,000 companies are tenants at the Gasan Digital Complex. Mario Outlet added its second mall in 2004 and its third in 2013. But it has been waging a never-ending war with outdated regulation ever since. The State Industrial Complex Act bans retailers. “My business is considered illegal for selling products made in China in my own buildings.”

Worse, there is nowhere for Hong to plead. There was no mention of his complaints in the media despite the racket he had raised in the parliamentary conference. “No one hears out cries from businessmen in this country,” he said. The government could argue that it has done its best. It licensed Mario Outlets and revised related laws to allow retail and sale in industrial parks. There had been sacrifices in the process. Laws and regulations are as tough as weeds. They spring back no matter who fights them.

Industrial complexes are the birthplace for the Korean manufacturing power. They are responsible for 70.3 percent of factory output, 73.9 percent of exports and 48.5 percent of employment. But the industrial complexes are withering from over-aged facilities and outdated regulations. The government has recently announced an outline to upgrade industrial complexes across the nation. Housing, cultural, welfare and transportation infrastructure will be upscaled, and it would allow all businesses with few exceptions. But actions speak louder than words. The government must root out sclerotic regulation no matter what.

JoongAng Ilbo, Nov. 28, Page 38
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