Big retailers nix projects in southwest Korea

Social Affairs

Published: 20 Mar. 2023, 18:13

Big retailers nix projects in southwest Korea

People stand in line to enter a Costco branch in Gimhae, South Gyeongsang. [YONHAP]

Residents in Iksan, North Jeolla, were expecting to see the first Costco in southwest Korea open in their largely rural town as early as this year. That won't be happening, however.

Iksan's city government announced on March 12 that the big box store in January had cancelled its provisional contract to enter the Wanggung Logistics Complex, citing administrative delays and slow development of the site.

The city of Iksan was looking forward to Costco causing a local ripple effect, with the higher numbers of visitors leading to more tourists at local historical and cultural sites like Mireuksa Temple Site and the Jewelry Museum.

People visit the site of Mireuk Temple in Iksan, North Jeolla on April 30, 2019. [YONHAP]

The mayor of Iksan, Chung Heon-yul, visited the headquarters of Costco Korea last month to ask them to reconsider.

Costco responded by saying it could not resume the project unless special alternative proposal are made.

Instead, the city of Iksan said that Costco is looking into three or four alternative sites in Iksan, at the strong recommendation of the city government.

Costco had previously proposed to build its first site in southwest Korea in the city of Suncheon in South Jeolla in 2012 and in Jeonju, North Jeolla in 2017. Those plans fell through due to opposition from local merchants and local protections for small business.

“As the opening of Costco has a major impact on the area economy, we will respond to the situation considering every possibility and prepare by drawing up measures to protect merchants in the region,” an official from the city government said.

Delivery trucks of a major e-commerce platform Coupang is parked at a parking lot in Seoul on May 12, 2022. [YONHAP]

Another community in North Jeolla also failed to bring in a large retailer to the area last year.

Coupang, a major e-commerce operator in the country, was to invest 130 billion won ($99 million) to build a 100,000 square-meter warehouse in Wanju County's Wanju Techno Valley Industrial Site.

However, the company nixed the plan over a conflict with the county office over land price.

The county was also able to mitigate the fallout as fashion retailer Cowell Fashion made a bigger investment to build a 145,800 square-meter large logistics complex at 220 billion won.

According to the provincial government of North Jeolla, Coupang’s investment is on hold as other cities and counties, including Iksan, Imsil, Jungeup and Gochang, are also trying to lure the company.

“I will constantly talk with Coupang to ensure it builds its warehouse in North Jeolla,” said Kim Kwan-young, governor of North Jeolla last year. Kim has pledged to bring at least five affiliates of major Korean conglomerates to the province.

“Coupang has long stressed the necessity of building a warehouse in southwest Korea for delivery to customers in the area,” said an official from the provincial government, adding that specific plans will be shared later in the year.

BY KIM JUN-HEE, CHO JUNG-WOO [cho.jungwoo1@joongang.co.kr]