Tuesday, December 14, 2010

Confucian Capitalism in Korea

"The Great Chicken War ended after a mere five days, with Lotte Mart folding its tent and giving the field back to the franchises," Lee Jung-yoon — Lotte Mart turns tail in chicken sale. The big box in question "canceled its year-long offer of cheap chicken - 5,000 won ($4.37) a bucket, one-third the price charged at regular outlets."

The author notes, "The Davids in the war - franchises and mom-and-pops - have been protesting even before Lotte fired up the deep fryers." Suggesting that "the decision came out of consideration for corporate social responsibility," the author quotes Lotte Mart's Jeong Won-heon as saying, "We decided to stop the offer after considering the fact that it could threaten the very existence of small chicken businesses."

On the other hand, "the franchises and mom-and-pop shops may have suffered a serious wound in the war," as the "tussle raised the question of whether franchises are overcharging for chicken." The author mentions "suspicion[s] over price-fixing in chicken franchises," with "the price of a fried chicken, often above 15,000 won, [being] so much more than the price of raw chicken, which was 2,985 won."

"In the end," the author suggests, "it was the consumers that got the short end of the stick."

I tend to side with "mom-and-pop shops" over big boxes, and laud efforts at "corporate social responsibility," but it is true that here in Korea the small business often act in collusion as a kind of cartel.

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