South Korea’s major retail chains posted an increase in sales for the first half of this year, a market report said, despite concerns over the introduction of an anti-graft law last year.
The anti-graft law that took effect September 2016 was expected to hit local retailers, as it bans businesses from treating government officials, teachers and journalists to expensive gifts, meals and drinks.
The law bans free meals valued over 30,000 won (US$ 26.3), gifts worth more than 50,000 won and congratulatory or condolence money of more than 100,000 won.
The government is considering raising the permissible amount to a certain degree, as the law has dented sales of flowers and gift sets of Korean beef, fruit and red ginseng.
Sales of the country’s four major retailers gained 3.0 percent to 24.4 trillion won (US$21.2 billion) for the first six months of this year from 23.7 trillion won a year earlier, according to market tracker FnGuide.
Shinsegae Department Store witnessed a whopping 37.9 percent jump in sales, while E-Mart, the country’s largest hypermarket chain, and Hyundai Department Store saw gains of 8.8 percent and 2.5 percent, respectively.
Lotte Shopping Co. was the only exception, with sales contracting 3 percent on-year.
Industry sources attribute Lotte’s weak numbers to Beijing’s retaliation against Seoul for the deployment of a U.S. missile defense system on its soil.
Chinese visitors have fallen sharply in recent months and those that have come have shunned Lotte outlets, as the chain provided a golf course in Seongju, North Gyeongsang Province, for the stationing of the U.S. Terminal High Altitude Area Defense (THAAD) battery.
The Chinese government has shut down many Lotte outlets in China, citing violations of fire safety regulations, while banning imports of Korean pop culture content and the sale of tour packages to South Korea.
BGF Retail Co., the operator of South Korea’s largest convenience store chain, CU, reported a 28.9 percent surge in sales, while GS Retail, the operator of GS25 convenience stores, posted a 16.1 percent drop.
“The retail industry has been more affected by the THAAD issue than the anti-graft law,” Lee Jong-woo of IBK Investment & Securities Co. said. “Retailers’ stock prices have also moved in accordance with their respective circumstances.”
(Source: Yonhap News Agency)