IKEA-bashing shows it is time for consumer rights

The Korea Times

The Korea Times

Opinion

Michael Breen

IKEA-bashing shows it is time for consumer rights

Posted : 2015-03-26 16:40

Updated : 2015-03-26 16:57

By Michael Breen

The front-page revelation last week that some products of the recently arrived Swedish furniture-maker are expensive may seem like just another half-interesting business story.

But the lack of newsworthiness should not put readers off.

For not only is this just the first strike in what could become a war against IKEA but it also illustrates a deep flaw in Korea.

To remind, the Fair Trade Commission (FTC) and the Consumers Union of Korea last week released a study that showed that 44 products at IKEA's store in Gwangmyeong were priced higher than the average in other OECD countries. The study covered 49 products.

My first thought was, "So what? This is capitalism. The higher price is probably explained by transport costs."The second thought was, how come the survey missed the 9,151 other products that IKEA sells?

But I'm a foreigner. I know IKEA. When it started in the 50s, it was a category-changer, providing furniture that was cheap and cool. It was the Apple of furniture.

But for Koreans it's new. The implication for them, neatly captured in the headline in one of our rival newspapers ― "Some prices at IKEA are eye-popping" ― is that the crafty Swedes are ripping off the innocent Korean people.

With business stories, journalists so often fail to apply critical judgement. They passively convey what government and business wish to say. Who suffers from this professional failure? The consumer of news. We get misled.

My bet is that this is just the beginning. Korea Inc. is going to try and royally shaft IKEA.

I'll make my case with two questions: why did the Fair Trade Commission do this study and what is the Consumers Union of Korea?

To answer the first, consider this quote from a press release by Yang Hae-chae, head of the Korea Federation of Furniture Industry Cooperatives: "IKEA's opening in South Korea will be disaster for domestic furniture manufacturers especially for small and mid-sized businesses."

A few weeks later FTC head Jang Duck-jin said the Commission planned to check ― in cooperation with consumer groups ― to determine if IKEA had a deliberate high price policy in Korea.

See the connection?

Now, the FTC may wish to point out that it is doing its job as the official referee, tasked with ensuring fair play in business in the interests of protecting consumers' rights.

To which I would say, kiss this. Consumers don't have rights in Korea.

This is a country where everything is set up for the producer. Incentives, loans, government support schemes, you name it, they're all there for the producer. Why? Because, historically, in Korea's export-led economy, the consumer was a foreigner.

This doesn't mean that Korea is chaebol-controlled. Far from it. You can read every day about the problems facing big business. Korea is in fact quite a socialist country whose leaders listen to "the people." The producer-orientation remains because we are all producers, just as we are all consumers.

In other words, the producer is not just the rich owner. Small-business owners, like mom-and-pop stores, and individual services providers, like taxi drivers, are "producers." So is labor. When mom-and-pop stores complained about hypermarkets, where busy people prefer to shop, our genius leaders came up with the stupid law forcing them to close every second Sunday. Now, taxi drivers are complaining and Uber is being driven out of Korea. See the pattern?

In their role as consumers, Koreans are so emotionally manipulated by the unfortunate folk among the producers that they are rendered passive and unaware that it is fine to not care where a product is from as long as you like it and can afford it.

That's what I mean by no sense of consumer rights. And if you've ever wondered why Korea's service sector sucks the big one, there's your answer. It is not pressured by consumers to serve.

So, it has no meaning that 48,000 people turned up on the freezing day last December when IKEA opened its store (it was here before but selling online). It will not be hard for the small furniture stores to make them feel like guilty traitors.

They can do this because no one tells them to stop whining. Instead, officials see their moaning as a call to action.

You may wonder why the consumers don't have a voice. And that leads to my second question: what is the Consumers Union of Korea? It claims to be an advocate for consumer rights but is in fact a paternalistic body that, in its own words, aims to educate consumers to make "rational and wise choices."

Before the recent arrival of a small group called ConsumerWatch, there has been no group in Korea that has advocated consumer rights in the proper sense.

It's time to change this.

Michael Breen is the CEO of Insight Communications.