Saving small businesses
Mom-and-pop stores in front of elementary schools, small eateries in rundown residential areas and other types of family-run businesses in back alleys are under the constant threat of being wiped out by large enterprises expanding into their traditional territory. Their only recourse for survival may lie in the deep nostalgia the general public holds for them.Self-employed people and those running small- and medium-sized enterprises are appealing to this public sentiment when they put pressure on lawmakers to protect them from what they regard as the insatiable greed of corporate conglomerates, whose franchises are opening so many business outlets at their expense.
No wonder candidates vying for election to the National Assembly are all out to commit themselves to the protection of small businesses when a general election comes around. It is the same with mayoral, gubernatorial and presidential candidates. Moreover, they strive to make good on their campaign promises when they are elected to public office.
Under mounting pressure from the owners of small businesses, the Lee administration announced a new package of policies earlier in the week, designed to protect them from large corporations having 200 billion won or more in annual turnover and 200 or more people on their payroll. Among those are large confectioneries and diners doing franchise business.
Beginning in March, for instance, a large bakery franchiser will be restricted from granting franchises in excess of 2 per cent of the total operating the previous year. No new store will be allowed to open within 500 metres of an existing one.
The newly adopted policies will help small businesses survive the otherwise intensifying competition. But the downside is that they prioritise the interests of small businesses over consumers. With competition severely restricted among providers, consumers will be denied an opportunity to be provided with goods of higher quality at lower prices.
Moreover, permitting regulators to pick winners and losers is not keeping with the tenets of a market economy. Competition must be allowed to the greatest extent possible under the condition that fair trade regulations are strictly administered no matter what. No regulator should be excused for looking the other way when conglomerates are engaged in unfair trade practices.
A better alternative to regulations on conglomerates would be for the government to provide help for small businesses banding together through their trade associations for job training, quality improvement and better management.