Anti-communist remarks lead to Starbucks Korea boycott
Images calling for a boycott of Starbucks Korea / Screenshots from Twitter
By Kim Jae-heun
There are signs of a boycott movement against Starbucks Korea sparked by Shinsegae Vice Chairman Chung Yong-jin's recent anti-communist remarks on social media. Shinsegae is the parent company of E-mart, which owns 67.5 percent of Starbucks Korea.
On Monday, some netizens started spreading images on various online communities calling for a boycott.
On Jan. 6, Vice Chairman Chung had uploaded on Instagram an image of an article from Korean daily Chosun Ilbo that had a picture of Chinese President Xi Jinping and was criticizing the Korean government's silence toward a high-level Chinese official who had referred to Korea as a “minor country.” Chung tagged the image with the hashtag, “destroycommunism” (“myeolgong” in Korean), and it set off controversy. Later that day, the vice chairman replaced the image with a photo of North Korean leader Kim Jong-un. The vice chairman has uploaded anti-communist posts on social media five times in recent months.
The incident spread to the political circle and the spokeperson for ruling Democratic Party of Korea (DPK) presidential candidate Lee Jae-myung subsequently tweeted that he will not drink Starbucks coffee anymore. Supporters of the DPK showed their intention to join the boycott of Shinsegae.
But Starbucks Korea has become the first victim of the boycott. The coffeehouse chain is one of the major subsidiaries of the retail giant, having shown continuous growth since its entrance in the local market. Chung is the one who brought the Starbucks brand here in 1997, and he has referred to himself as the very first fan of Starbucks Korea.
For 2021, Starbucks Korea's accumulated sales as of the third quarter reached 1.72 trillion won, and after its fourth-quarter business performance is revealed, the total sales for last year is expected to surpass 2 trillion won. It will be the first coffee shop franchise to achieve over 2 trillion won in annual sales in Korea. In 2020, Starbucks was also only 71.6 billion won short of reaching the same figure in annual sales.
After E-Mart signed a contract last July to acquire an additional 17.5 percent share from the headquarters, Starbucks Korea became majority-owned by the Korean company. Originally, Starbucks Korea was established 25 years ago as a joint venture between Starbucks Corporation in the United States and E-mart, with each holding a 50-percent share. After E-mart increased its share to 67.5 percent in July, the retailer changed its corporate name to SCK Company.
Market insiders point out that it is natural for ruling party supporters to boycott Starbucks, Chung's favorite coffee shop. The coffeehouse chain is a cash cow for E-mart, as it accounts for 55 percent of the large grocery store chain's annual operating profit. In the third quarter of last year, Starbucks Korea's profit skyrocketed year-on-year by 108.2 percent to reach 80.6 billion won.
But after Chung's anti-communist remarks triggered this recent controversy, Shinsegae's stock value decreased by 6.8 percent to end at 233,000 won on Jan. 10. A Shinsegae official explained the drop by saying, “It is believed to reflect the overall weakness of the cosmetics industry due to unclear prospects in the Chinese market.”
As the backlash against Shinsegae grows, Chung said he will stop putting “destroycommunism” hashtags on social media.
JP Morgan CEO Jamie Dimon also made an apology recently after making an offhand comment against the Chinese Communist Party last Nov. 23, nearly jeopardizing his company's business in China.