Casual-clothing chain Uniqlo says its sales have been affected as the consumer boycott of Japanese goods intensifies in South Korea.
Uniqlo, owned by Fast Retailing, will close a downtown Seoul store soon, but says this is due to a decision not to renew a lease rather than the Japan boycott as reported by Japanese news media.
Uniqlo has close to 190 stores in South Korea where it sells around US$1.3 billion of clothes annually, accounting for 6.6 percent of its revenue.
Meanwhile, the boycott is leaving some South Korean companies that some consumers have labeled as “Japanese companies” struggling to explain themselves.
South Korean consumers are boycotting Japanese products from beer to pens in protest over Japan’s decision to impose restrictions on exports of key high-tech materials to its Asian neighbor. While Japan cited security concerns for the curbs, the move also been seen as retaliation after a South Korean court last year ordered Japanese companies to compensate Koreans who were forced to work for Japanese occupiers during World War Two.
Japan has also removed South Korea from a list of favored trading partners.
“It is not easy to clear up the misunderstanding as there are some complicated cases of stake relationships that are confusing even to consumers,” wrote D M Park of Korea Bizwire.
For example, Daiso, a flat-priced household goods company run by Asung Daiso, has been dogged by constant attacks from some consumers saying it is a “Japanese company” since the beginning of the boycott campaign.
Daiso originally started in May 1997 when Park Jung-won, a former office worker, opened a household goods store called “Asco Even Plaza” in Seoul. In November 2001, the company changed its name to Daiso Asung in cooperation with Daechang Co, a Japanese distributor of flat-price goods. Daiso is the Japanese pronunciation of Daechang. It later registered as a foreign-invested company under the Foreign Investment Promotion Act in March 2002.
Currently, Park holds 50.02 percent of Asung HMP, the largest shareholder, while Japan’s Daechang Industrial holds 34.21 percent of the shares.
The problem is that Japanese companies own more than 30 percent of the shares, and Japan also has more than 2900 stores of the same mutual, uniform price household goods company run by Daechang Industrial.
“There is no relationship between Japan’s Daiso, Japan’s payment of royalties, personnel exchanges, nor participation in management except for equity investments,” stressed a representative of Asung Daiso.
“Samsung Electronics also has a high foreign stake, but that does not make Samsung a foreign company,” the representative said.
Coupang, a leading e-commerce company, also suffered from rumors that it was a Japanese company after Japan’s Softbank Vision Fund (SVF) made equity investments.
Although Coupang, an unlisted company, has never made its exact stake public, industry sources estimate that SVF’s stake in Coupang will exceed 30 percent.
Coupang responded quickly through its own promotional channel as such rumors spread quickly in the early days of the boycott and showed signs of affecting sales as well.
“Foreign ownership of KB Financial Group is close to 70 percent, while foreign ownership of Samsung and Naver is also close to 60 percent,” Coupang explained.
Coupang then laid out the similar logic of Daiso that high foreign investment in shares does not mean that a company is a foreign company, hoping to overcome impact from the Japan boycott.