Korean Legislator Has Had Enough Of Starbucks

A good weekend story.

Business Korea reports

Lawmaker Preparing ‘Starbucks Act’ to Limit Its Unbridled Expansion

As of the end of last month, Starbucks Coffee Korea stores totaled 1,008. In terms of stores per capita, Korea had double the number of Starbucks stores in Japan and ranked fourth in the world. 

Starbucks Korea (Lee Seock-koo,CEO), which entered Korea in 1999, has been quite aggressive. Starbucks stores that numbered only 477 in 2012 exceeded 1,000 stores last year. This means that they have opened more than 10 stores a month. Aggressive store openings immediately led to sales growth. Starbucks’s consolidated sales last year swelled upwards 30% to 1,002.8 billion won (US$902 million), exceeding one trillion won (US$900 million) for the first time as a coffee franchise in Korea. Combined sales of Twosome Place, Angel-in-us, Coffee Bean are eclipsed by Starbucks’s sales.

Industry experts point out that the key to boosting sales by increasing the number of stores in Korea is that coffee shops of the other Korean coffee franchises are subject to restrictions on distances between coffee shops as they are being run in the form of a sales agency, but Starbucks coffee shops are free from such restrictions as they are directly run by the head office.

“Starbucks’s unbridled expansion is threatening other franchised coffee shops and self-employed coffee shops, so Starbucks’s new store openings should be controlled and limited like large SSM stores,” they said. “For fair competition, it is necessary to legislate the “Starbucks Act” which restricts distances between coffee shops like other franchised coffee shops.

In order to protect Korean coffee brands, Kim Jung-jae, a lawmaker of the Liberty Korea Party is preparing legislation against Starbucks which is not subject to such restrictions.

“We will focus on helping local coffee shops have fair competition by making an excellent relevant law,” said a representative of lawmaker Kim. “We are currently working on details of legislation.”

Meanwhile, Starbucks Coffee Korea filed a trademark lawsuit against small Korean coffee company El Preya in 2005 but lost it, making the newspaper.