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Small regional business cies over IKEA Giheung's arrival

IKEA Korea has opened its third outlet in Giheung, Dec. 12, 2019. Concerns are raising that the entrance of IKEA Giheung can kill the small business in the region and cause extreme traffic jam there./ Yonhap
IKEA Korea has opened its third outlet in Giheung, Dec. 12, 2019. Concerns are raising that the entrance of IKEA Giheung can kill the small business in the region and cause extreme traffic jam there./ Yonhap

By Jung Hae-myoung

IKEA Korea opened its third outlet in Dec. 2019 in Giheung, Yong-in, Gyeonggi Province, but not all people welcomed its arrival. Concerns are rising over how it will reach a compromise with small, mid-sized business there, and how extreme traffic jams in the area will be dealt with.

The company opened its first outlet in Gwangmyung in 2014, and three years later opened another in Goyang, on the outskirts of Seoul. Although IKEA Korea is expanding across Gyeonggi Province and other metropolitan areas, criticism has arisen that the Swedish furniture giant may hurt relevant regional businesses.

"Most of the roads and supporting infrastructures are built for IKEA and other big businesses, so it is less likely that people will visit regional furniture shops," a furniture saleswoman at Eojeong Furniture Town in Giheung, said. "Rather than making a specialized commercial space, the big companies are ruining the whole system," she added.

Big malls are ideally-positioned to attract more visitors given their complexity and accessibility, but it does not necessarily lead to prosperity for all businesses in the region.

A regional furniture business association has hung a placard saying "IKEA should leave because it kills the right to live."

Leading domestic furniture makers such as Hanssem have barely survived, while some small and mid-sized companies have been forced to close.

According to a 2018 report from the Korea Small Business Institute, the sales at small businesses within two kilometers of the IKEA mall drastically decreased after it was built.

Small furniture businesses are helpless in front of big domestic furniture companies which are confronting IKEA by forming cartels.

Near IKEA Giheung stands Lotte Premium Outlet which opened in 2018, and another shopping mall complex will be erected this year across the road that will incorporate Hanssem Design Park, Hyundai Liveart, and Casamia.

"When IKEA entered Korea, the total home furnishing market in terms of overall market volume expanded. We see the same thing in Giheung," an IKEA official said at the press conference of the opening ceremony in December, last year.

It also said it has employed around 500 staff of which 62 percent are from around the region.

"We are trying to create a win-win relationship with the surrounding furniture businesses in order to develop hand in hand as good neighbors," the IKEA official said. "We are reaching agreements with interested parties and will follow up accordingly. We will try to raise interest in the home-furnishing market among customers and create more jobs in the region in order to activate regional businesses and contribute to finding ways to coexist."

Another concern is traffic jams. Since Lotte Premium Outlet opened in Giheung in 2018, residents are suffering from extreme congestion. As of July 2019, 3,300 to 9,400 cars flowed from other regions into the city.

According to some residents, the road near IKEA and the Lotte outlet turns into a parking lot every weekend, and people are even considering moving because of the traffic. Although Yongin is also working hard to find a solution within the region, there are limits to what it can do, according to officials.

"We are seeking various ways on how to protect the regional economy. But this is a private enterprise so there is not much we can do about it," an official at the city said.

In order to reduce the impact, the city has extended the car lanes leading up to IKEA and has secured a three-story parking lot that holds 1,665 cars and temporary space to hold 800 cars.

"We will also give notice to visitors and employees that they can visit the mall with other transportation to reduce traffic," an IKEA official said. How much of a difference this will make is yet to be seen.


IKEA Korea has opened its third outlet in Giheung, Dec. 12, 2019. Concerns are raising that the entrance of IKEA Giheung can kill the small business in the region and cause extreme traffic jam there./ Yonhap
IKEA Korea has opened its third outlet in Giheung, Dec. 12, 2019. Concerns are raising that the entrance of IKEA Giheung can kill the small business in the region and cause extreme traffic jam there./ Yonhap

By Jung Hae-myoung

IKEA Korea opened its third outlet in Dec. 2019 in Giheung, Yong-in, Gyeonggi Province, but not all people welcomed its arrival. Concerns are rising over how it will reach a compromise with small, mid-sized business there, and how extreme traffic jams in the area will be dealt with.

The company opened its first outlet in Gwangmyung in 2014, and three years later opened another in Goyang, on the outskirts of Seoul. Although IKEA Korea is expanding across Gyeonggi Province and other metropolitan areas, criticism has arisen that the Swedish furniture giant may hurt relevant regional businesses.

"Most of the roads and supporting infrastructures are built for IKEA and other big businesses, so it is less likely that people will visit regional furniture shops," a furniture saleswoman at Eojeong Furniture Town in Giheung, said. "Rather than making a specialized commercial space, the big companies are ruining the whole system," she added.

Big malls are ideally-positioned to attract more visitors given their complexity and accessibility, but it does not necessarily lead to prosperity for all businesses in the region.

A regional furniture business association has hung a placard saying "IKEA should leave because it kills the right to live."

Leading domestic furniture makers such as Hanssem have barely survived, while some small and mid-sized companies have been forced to close.

According to a 2018 report from the Korea Small Business Institute, the sales at small businesses within two kilometers of the IKEA mall drastically decreased after it was built.

Small furniture businesses are helpless in front of big domestic furniture companies which are confronting IKEA by forming cartels.

Near IKEA Giheung stands Lotte Premium Outlet which opened in 2018, and another shopping mall complex will be erected this year across the road that will incorporate Hanssem Design Park, Hyundai Liveart, and Casamia.

"When IKEA entered Korea, the total home furnishing market in terms of overall market volume expanded. We see the same thing in Giheung," an IKEA official said at the press conference of the opening ceremony in December, last year.

It also said it has employed around 500 staff of which 62 percent are from around the region.

"We are trying to create a win-win relationship with the surrounding furniture businesses in order to develop hand in hand as good neighbors," the IKEA official said. "We are reaching agreements with interested parties and will follow up accordingly. We will try to raise interest in the home-furnishing market among customers and create more jobs in the region in order to activate regional businesses and contribute to finding ways to coexist."

Another concern is traffic jams. Since Lotte Premium Outlet opened in Giheung in 2018, residents are suffering from extreme congestion. As of July 2019, 3,300 to 9,400 cars flowed from other regions into the city.

According to some residents, the road near IKEA and the Lotte outlet turns into a parking lot every weekend, and people are even considering moving because of the traffic. Although Yongin is also working hard to find a solution within the region, there are limits to what it can do, according to officials.

"We are seeking various ways on how to protect the regional economy. But this is a private enterprise so there is not much we can do about it," an official at the city said.

In order to reduce the impact, the city has extended the car lanes leading up to IKEA and has secured a three-story parking lot that holds 1,665 cars and temporary space to hold 800 cars.

"We will also give notice to visitors and employees that they can visit the mall with other transportation to reduce traffic," an IKEA official said. How much of a difference this will make is yet to be seen.


Jung Hae-myoung hmjung@koreatimes.co.kr

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