Wholesaler taps into Korean food market in Middle East

By Kang Hyun-kyung

DUBAI — Shin Dong, a Dubai-based wholesaler who also owns Asian grocery store 1004 Mart, realized a potential market for Korean fruit in the Middle East after the successful sales of Jeju Island tangerines last year.

Shin Dong, a Dubai-based wholesaler who also runs Asian grocery store 1004 Mart
/ Korea Times

In November, he imported 3,500 10-kilogram boxes of tangerines from the island and sold them to Abu Dhabi and Dubai consumers through Lulu Hypermarket, a multinational retail chain that operates in the United Arab Emirates.

The tangerines sold out, enabling Shin, 60, to heave a sigh of relief.

"Before this, I was very worried about my decision to import tangerines from Jeju Island because fruits like tangerines easily perish," he said on Jan. 12 at his office in the 1004 Mart storage warehouse in Dubai Investment Park.

The tangerines were non-greenhouse tangerines, that is, they were raised outside a greenhouse. Non-greenhouse tangerines are grown on the island only in November, compared with greenhouse tangerines, which are grown all year around. Shin said he only imports outdoor-grown tangerines because greenhouse-grown ones are not cost effective.

Encouraged by the moderate success and consumer satisfaction, he conducted another experiment, this time with strawberries.

Shin said strawberries are "even more sensitive," that is, even more easily perishable, than tangerines. Strawberries need to be shipped by air because of its short shelf life. Korean strawberries are now being sold at Lulu Hypermarket in Abu Dhabi.

Shin began to explore the fruit business last year in an effort to diversify. His move coincided with the Korean government's announcement to promote Korean food in the Middle East.

Shin has been doing business in the Middle East for 29 years. He first arrived in Jeddah, Saudi Arabia, in 1987 as a textile marketing manager for Sunkyung, which was later renamed as SK Group. His duties at his job in Jeddah at that time included meeting local distributors and wholesalers to encourage them to import Sunkyung fabrics. He relocated to Dubai in 1992 after he was promoted as the head of the local office.

His years of experience in the Middle Eastern textile business opened his eyes to a new business opportunity — textile brokerage. He found that over 90 percent of textile agents who served as a bridge between suppliers and local distributors were Indians.

"I wondered why there were no Korean textile agents in Dubai, where a huge textile market was in place, because at that time, Korea had a prospering textile industry and was considered home to premium fabrics," he said.

Shin became the first Korean textile agent in Dubai. "People like me were called ‘budongsan' or realtor in English because I made a living by matching textile suppliers overseas and local distributors," he said.

His business went well partly because he was able to find premium textile providers from Korea. Following his success, 15 additional Korean companies had been created to deal with the textile brokerage business.

Business, however, wasn't always smooth-sailing. In the early 2000s, China began to rise as a global powerhouse with cheaper labor costs and textile businesses relocated to China. The Korean textile industry began to suffer as a result.

Shin realized that it's time to change his business area and explored interior design and curtains. But his new ventures didn't go well.

After years of preparation, he finally entered the grocery business in 2008, opening the retail store 1004 Mart, which sells mostly processed Korean food items. The name of the grocery store pronounced in the same way of the Korean word "cheon-sa" or angel. The timing was bad, however, as the Dubai economy was hit hard by the Wall Street-born financial crisis in the same year.

"Although the food industry was less affected by the financial crisis that hit Dubai in 2009, it was tough for me to manage the new business area," he said. He opened an online store to sell processed Korean food products to some 15,000 Korean consumers in Dubai. In 2008, Dubai-based Koreans were his main consumers. To diversify his income source, Shin also provided a catering service for Korean construction companies operating there. This new business started to become lucrative after several Korean companies, which were potential clients, won deals to construct buildings in Dubai in 2012 and 2013.

Today, Shin's grocery business has the lion's share in the Korean food market in the Middle East with a 65-percent market share. The company has some 50 employees and annual sales of approximately 15 billion won.

Last year was a milestone in his business because he shifted his consumer focus from Koreans in Dubai to locals. No Korean company won construction deals in Dubai last year, and his catering business, which makes up 35 percent of his income, would suffer.

The wholesaler decided to turn his attention to sushi restaurants and luxury hotels as new business partners and provided them with processed food products and raw fish. Since last year, he has been importing $20,000 worth of flatfish from Jeju Island every month for the sushi restaurants in luxury hotels in Dubai. During the process of importing the fish, the businessman discovered the wonders of flatfish trade.

"Flatfish sleep when the water temperature goes down to a certain degree," he said. "And they wake up once the temperature goes up."

Flatfish's temperature-sensitivity helped Shin import fresh fish. Once they are caught in the waters off the southern island, fishermen pack each of them with ice in a plastic bag. The fish then fall asleep on the journey from Jeju to Dubai. By the time the plane lands in Dubai, the ice has melted and the water temperature in the plastic bags has gone up, waking up the fish.

"This is how I can provide fresh Jeju flatfish to hotels and sushi restaurants in Dubai," he said.

Shin plans to distribute more Korean fruits, fish and processed food products in the Middle Eastern market. He said in addition to strawberries, tangerines and flatfish, some processed Korean food products, such as dumplings and briskets, can appeal to the Middle Eastern consumers.

"There's no doubt that Samsung smartphones and Hyundai automobiles have done well in the Middle East when it comes to sales," Shin said. "However, Korean food has a long way to go."

According to him, some 30,000 to 40,000 processed food products, fruits and vegetables from all over the world are selling in Carrefour, Europe's largest retailer, but only three of them are from Korea — ramen; choco pie, a snack cake consisting of two small round layers of cake with marshmallow filling and chocolate covering; and kimchi.

Thanks to him, 16 processed Korean food products are now available at large retailers in Dubai and Abu Dhabi, and he recently inked a contract with local retailers to provide 30 more processed food items to local consumers.