By Kwaak Je-yup
Hyundai Motor Group announced Friday it was going to close its food and beverage unit Ozen, in an attempt to deflect public anger towards chaebol families and their advancement into small businesses like bakeries and restaurants.
Part of its hospitality subsidiary Haevichi Hotel and Resort and technically only a cafeteria, it was categorized alongside some conglomerate bakeries as preying on independent neighborhood outlets, the company said.
The announcement follows the one made by Samsung Group’s Hotel Shilla the day before, which said it was folding bakery unit Artisee under affiliate Bonavie and selling the 19-percent stake in Artisee Boulangerie, the in-house operation at Home Plus, a discount store joint-owned by Samsung and British supermarket giant Tesco.
These responses came after President Lee Myung-bak’s public criticism Wednesday, who said chaebol would be better off investing in innovation rather than encroaching on small businesses. He added that the likes of Lotte Group’s Parisian import Fauchon and Shinsegae’s Chosun Hotel Bakery should practice good business ethics when looking to expand.
“Ozen had only two outlets, in Hyundai Motor and Kia Motors’ headquarters in Yangjae-dong (in the southern edge of Seoul) and the Haevichi Hotel in Jeju Island,” said the Hyundai Motor’s Friday press release, adding that the former’s isolated location had made it imperative to open a place for people to buy breakfast. “Unlike other large corporations’ food and beverage operations, it had no in-house facilities for making bread, which, along with all other products on sale, was sourced from outside providers.”
The name of the business would be discarded and the two currently-occupied spaces would be converted into lounges, according to the statement.
The outcry appears more driven by populism and capricious public sentiment than by business calculations. The daughters of chaebol families who run these allegedly predatory operations have been caricatured as spoiled shoo-ins, running businesses without many problem areas. Eric Kayser, named after a French celebrity baker and opened here by Hanwha, was conspicuously left out of the supposed pack of wolves, possibly due to the absence of a female owner.
Owners of small, independent upstart bakeries say the criticism misses the point.
“It’s the trend (to open a bakery),” said Choung Wong, who operates Itaewon establishment May Bell Bakery in central Seoul that commands a sizeable local and expatriate customer base. “We could complain about conglomerates (entering into the sector), but personally speaking, we (the independent bakers) need to change, adapt to the new environment.”
Shops like May Bell have distinguished themselves with overseas training in baking and/or segmented marketing, charging more for the premium. They have achieved modest successes in the face of competition from large chains like Paris Baguette and CJ Group’s Tous Les Jour, the truly dominant forces in the bread market.
“We are a very small place with a system that has a lot to be desired,” said another owner of a three-year-old independent bakery in Gangnam, southern Seoul, which has established itself as the go-to place on the south side of the Han River for plain breakfast bread, which is difficult to find in conventional chains that often go heavy on sugar and syrup.
“But if you can differentiate yourself, you can compete.”
She requested anonymity for herself and the bakery, citing the sensitivity of the topic.