Namyang Dairy 'pressured' sales agents

Milk, juice and coffee products piled up outside the head office of Namyang Dairy Products in Namdaemun, downtown Seoul, Monday. Ten sales agents of Namyang staged a rally, accusing the leading dairy company of forcing them to buy more products than they needed. / Korea Times photo by Shin Sang-soon

Consumers start boycott campaign, prosecution raids headquarters

By Kim Jae-won

Investigators raided the head office of Namyang Dairy Products last week over allegations that the company was forcing its sales agents to buy more products than they needed.

The Seoul Central District Prosecutors’ Office said its officials seized documents, e-mails and inside reports of the company related to the sales scheme in the raid conducted on Friday.

The prosecution office said its investigators have reviewed the documents since then and will summon executives of the company if needed.

Ten sales agents of Namyang filed a complaint with the prosecutors’ office last month over the enforced sales order, referred to as “pushing out”. The agents claimed that the leading dairy company also forced them to buy products close to their expiry date.

The agents said they felt they had no choice but to buy the products because they were afraid the company would not extend their business contracts if they did not. The agents also accused Namyang’s sales employees of demanding “pocket money” of 100,000 won ($91) to 200,000 won per employee during holiday seasons.

Boycott movement

As Namyang’s suspect business practices were revealed, a group of Internet users launched an online campaign calling for a boycott of the company. So far, thousands of people have pledged not to buy the company’s products.

What made people more upset was a report detailing a Namyang official who verbally abused a sales agent. A transcript of the conversation, which contained coarse language and threats, was quickly made public through social networks.

Namyang’s CEO Kim Woong issued an apology through the firm’s website, saying the company had fired the official and promising not to repeat such wrongdoing. However, the statement has thus far failed to cool the sentiment of angry consumers.

Critics say the Namyang case is a typical example that illustrates how small business people suffer from unfair and illegal business practices from their bigger partners.

“Big firms force their subcontractors to sign unfair contracts, using their powerful status. Such business practices are prevalent here at retail and logistics industries,” said Lim Cheol-hwan, a director of Citizens’ Coalition for Economic Justice, a group of activists for economic equality.

Lim urged government agencies, such as prosecutors’ office and the antitrust commission, to punish such companies strictly to prevent such illegal practices.

“Nowadays small business owners file more claims related to unfair contracts as the new Park Geun-hye government vows to implement so-called economic democratization which seeks to protect small players from bigger rivals,” said Lim.

Stock markets reacted quickly to the news. Shares of Namyang were traded at 1,118,000 won on Monday afternoon at the nation’s major bourse, down 23,000 won or 2.02 percent from the previous close.