Costco very unhappy campers

Costco is not happy about Seoul City’s attempts to make them close every second and fourth Sunday, and they are especially unhappy about Seoul’s raid on several branches Sunday that led to a two-week suspension of meat sales.

Now Costco is suing three wards.

Some of the nationalist-twinged journalism that has produced is rather funny—for English, see here, for Korea, all you need to do is run a news search for “Costco” on Naver.

  • Bobby McGill

    Nice quote in the Herald piece: “I used to love Costco, but this behavior of going against the rules makes me feel like I shouldn’t buy too much from them.”

    Yah, she’s passionate about Mom and Pop’s plight.

  • Q

    The Korea Herald (Korean language) column sounds fair for both:

  • martypants

    What? Koreans unhappy about someone going against the rules? I’d bet a large sum of money these same people aren’t driving much – traffic rules are ignored routinely in my city, even when there’s a cop watching. Rules are jokes here.

    Good for Costco. They should violate this rule – it’s clearly designed to favor one group (local merchants). Despite some large local retails shops being under the same rule, the majority are the foreign owned businesses that suffer.

  • WangKon936

    Well, the Chaebol try to do the same thing, so the nationalistic card shouldn’t be used.

  • jkitchstk

    # 2,
    The English Korea Herald is completely one-sided, they couldn’t find one Korean person that understands…“As a large(foreign) mart, Costco believes that the principles of equal protection under the law should apply to all similarly situated parties,” Draper said.”

    Those at the Korea Herald are LAZY!

    So if I were to complain that the Seoul city ordinance that says there
    is NO-Smoking on a Seoul Plaza or NO-Drinking at a Seoul park and through my complaint the city ordinance was legally suspended until further notice…then ONLY I would be able to smoke and drink at those places in Seoul, everybody else couldn’t because they didn’t complain?

    “Costco’s Yangjae store accepts only cash or Samsung Card, which charges the lowest credit card commissions.”

    How could that be…?
    “Number of delinquent card loan borrowers shoots up”

  • berto

    i may have to take my cravings for a mountain of onion,ketchup and mustard slurry elsewhere.

  • Q

    Other Korean marts filed lawsuit and won. Costco was too lazy to join in the lawsuit and now belatedly complain about being regulated by laws:

    코스트코 파동의 출발점은 휴일 및 심야 영업을 규제하는 자치단체의 조례다. 각 자치단체가 조례를 제정, 대형마트 휴일 영업을 제한하자 이마트, 롯데마트 등 대형마트들은 소송을 냈다. 업계에 따르면 대형마트들은 전국 130여개 자치구에 소송을 내 대부분 승소했고 정상영업을 재개했다.

    문제는 코스트코다. 이 업체는 이마트 등이 벌인 소송전에 참여하지 않았다. 이러다 보니 이마트 등은 승소를 통해 영업을 재개했지만, 코스트코는 계속 영업제한 조례의 적용을 받게 됐다. 코스트코는 결국 ‘형평성’을 문제 삼아 휴일 영업을 강행했고, 서울시와 마찰을 빚었다.

  • holterbarbour

    The complaint about Costco’s selectivity with regard to payment methods is especially weak given that they maintain a similar policy in the US (or at least they did the last time I was there): cash, debit cards, or AMEX only. No Visa, Mastercard, or anything else.

    Also, waaah, not enough parking.

  • 코리아

    Yeah I’m also not a big fan of Costco attempted piggy-backing on the other stores lawsuits (Of course the likely weren’t invited the domestic chains would love to see them closed). Honest question though, if any of those people in the Herald piece actually exist, did they stop shopping at Costco? If there is actual public outrage over “their biggest PR scandal ever”, why were the stores just as packed as normal on Sunday?

  • Q

    Even though being late, Costco still can file lawsuits… why not?

  • madar

    I’m confused by this. Under westren legal precedent, when a court strikes down a law, it is gone, as if it did not exist, until either a higher court reverses the ruling or a new law correcting the courts objections is created. I’ve been told by a friend who works at a large law firm here that the same procedure applies in Korea. Unless he’s mistaken, or something else is occuring here, then why is a law that has been ruled by a court to be improper still having any effect on anyone?

  • madar

    Unless there is a good reason to keep only Costco closed, there are clauses in the Kor-US FTA that could lead to real problems for Korea if it is proven Costco is being targeted for selective prosecution. Targeted inspections and closing down Costco’s meat sales don’t help at all in this regard. I am starting to think that the new Seoul mayor doesn’t have a good understanding of the law and could be creating serious problems that he doesn’t understand.

  • Q

    madar, that’s a good point.

  • Q

    I mean #11 is a good point. You wrote #12 while I’m writing #13.

  • 코리아

    From what I understand, the law has not been struck down, but just a specifically worded injunction was put in place for the specific locations that went to a local court to challenge the rules. If a higher court (which I think it’s on the way to) then makes a ruling it will apply to everybody, not just those involved in the injunction.

  • Brendon Carr

    Also, waaah, not enough parking.

    The availability of parking is constrained by land-use permissions (i.e. the local government).

  • SalarymaninSeoul

    Let’s not give this “law” the benefit of calling it a law. When the “law” starts favoring some over others, it no longer deserves to be regarded as such. The losers in this are not only the larger chains, but the consumers who are hurt so that these “mom and pops” can survive, when really, they have no business being in business. This reminds me of the Lotte Mart chicken case when the government also stepped in to protect the mom and pops (price colluders) and forced cheap chicken off the market so the little guys could keep jacking up the prices and fleecing the consumers. If the mom and pops cannot stay in business then let them go out of business. There will be those that provide something unique to attract customers instead of lazily demanding the government protect them.

  • Brendon Carr

    When the “law” starts favoring some over others, it no longer deserves to be regarded as such.

    Be sure to tell us again why it’s fair that I should pay a greater share of my income in taxes than you.

  • SalarymaninSeoul


    I would never claim that to be fair, but I would rather claim that no one should be paying income taxes. And if income taxes need be paid, and it need not, then there should be a flat tax across the board.

  • Brendon Carr

    “You” in this instance is more an invitation to y’all.

  • Anonymous_Joe

    #5 jkitchstk: “So if I were to complain that the Seoul city ordinance that says there is NO-Smoking on a Seoul Plaza or NO-Drinking at a Seoul park and through my complaint the city ordinance was legally suspended until further notice…then ONLY I would be able to smoke and drink at those places in Seoul, everybody else couldn’t because they didn’t complain?”

    I was going to argue by posting a similar rights analogy. I think what we’re arguing is an equal protections clause, which I believe Korea purports to have some version.

    madar: “I’m confused by this. Under westren legal precedent, when a court strikes down a law, it is gone, as if it did not exist, until either a higher court reverses the ruling or a new law correcting the courts objections is created.”

    I don’t think the court struck down the law; I think they issued an injunction.

    Regardless, I still don’t understand the reasoning that equal protections don’t apply or for that matter the reason that Costco simply doesn’t file its own suit in court. After all, a precedent has been set, and I think Costco could argue their case in one sentence.

  • Anonymous_Joe

    #18 Brendon Carr: “Be sure to tell us again why it’s fair that I should pay a greater share of my income in taxes than you.”

    I’ll rehash that with you.

    First, are you sure that you pay a greater share of your income in taxes than the rest of each of us?

  • Brendon Carr

    “Y’all” in this instance really isn’t an invitation to you, Anonymous_Joe.

  • Anonymous_Joe

    I’ll sit this one out then, bro.

    Have at it. :-)

  • jkitchstk

    Next, the teabaggas’ll be complaining about death.

  • cm

    What a stupid law, forcing big chains to close every other Sundays.
    Nobody cares about the traditional outdoor market stores. People want to shop indoors where they don’t have to put up with hassles of outside markets.

    But it doesn’t sound like the law has passed yet if

    “Forty-two large discount stores and 87 super supermarkets (SSM) in Seoul, Daegu, and South Jeolla Province did not open Sunday, abiding by the disputed mandatory closure ordinance. ”

    If the Sunday closing law hasn’t yet been struck down then why don’t Costco just wait until the final court decision? Or, start their own court case against the law, instead of just breaking the law?

  • dokdoforever

    In Daegu, Homeplus and E Mart follow the law, but Nonghyup doesn’t.
    I wonder how effective this law really is at helping traditional markets, if that is the objective. The two are not really substitutes for one another. How many consumers who want to go to Homeplus on Sunday will decide instead to shop at a traditional market? Most likely, they’ll just wait until Monday night to go shopping. Or they’ll shop on Saturday.

  • feld_dog

    A friend told me that his brother-in-law (Korean) who works for Samsung was given about 2 million won for a chuseok bonus, but it was in the form of certificates that could ONLY be spent at traditional markets. Apparently anyone cashing in these certificates at a bank had to have a registered stall number, or something. I’m not sure what to think. I suppose I reluctantly support the idea.

  • gbnhj

    dokdofever, Nonghyup lobbied successfully for this law, and also for an exclusion to it based on a sufficient percentage of sales derived from locally-harvested agricultural and aquacultural products. That, of course, keeps them open on Sundays, and everyone else closed.

    Also, I’d point out that, once again, the KH gets it wrong: the Yangjae unit of Costco is not the company’s highest generator of revenue, but rather it’s highest generator of revenue per square meter (see here). This seems to have morphed somehow into ‘the most profitable COSTCO – anywhere, ever’ on the Ajumma Network, and the Herald is now repeating it as if it were fact.

  • gbnhj
  • cm

    Are traditional markets worth saving through Socialism?

  • thankswww

    They should make a compromise, and make Costco open on weekends for people who hold foreign passports. It could be like the casinos; where you need a foreign passport to get in.

    In all seriousness, this “law” is a joke, just as the people who created it and passed it are. It’s all quite laughable, unless of course you were born in an advanced nation, and reject the idea of the government telling you where you can or can’t spend your money.

    Adding insult to injury is the fact that Samsung is Costco’s Korean partner, but is not mentioned in ANY of the articles. Complete lack of due diligence and disclosure. ” The big bad American company is destroying the mom and pop shops”. The fake interviews in the Herald article are laughable, ridiculous, bordering on Korea Times levels of yellow journalism. What a joke. It’s not wonder foreign companies look at Korea and laugh, as they skip over this place on their way to do business in places like China or Japan, places where the people and government can actually be taken seriously.

  • madar

    Thanks for clarifying, I had assumed the law had been effectively struck down, not that specific injunctions had been put in place. That was never made clear in any of the (ah-hum) excellent English language anti Costco reporting I have read. The whole thing makes a lot more sense. I assume Costco had just decided that the law would almost certainly be struck down by the courts and they would just stay open and let fines pile up that they would never have to pay. However, the article about stone faced city inspectors entering Costco on the day they are supposed to be closed and finding a boat load of infractions that allowed them to shut down aspects of Costco’s business still disturbs me. I am sure they were told to be sure to find infractions to penalize Costco, the date of inspection making it pretty obvious that was the case. This is the way things roll in truly corrupt societies which I have lived in in the past. (Yes, waaay more than the worst of anything I have ever seen here, even 15 plus years ago.) I have to assume they nit picked over items that would never be cited under normal circumstances, as their totally perfect application would be too rigorous to allow a business to function in the real world. Normally a request for a bribe would follow, but here it was a statement of, “This is our house, Costco, you just live in it.” Not a fair and equal application of the law.

  • slim

    That Korea Law Today blog should be added to the ‘roll of the Hole. Thanks gbnhj.

  • jefferyhodges

    jkitchstk (#25), good one!

    Jeffery Hodges

    * * *

  • cmm

    @28 Yeah, Samsung started that last year, I believe. To circumvent it (get my money without having to go shopping in confusing small markets all over the city), my coworkers and had to “sell” them to another coworker’s mom’s friend, who worked in one of the markets, and cashed them out for us for a small commission. It all worked out, small market employee got a cut and I likely spent the money at Costco in the end.

  • Benjamin Wagner

    Draper’s Korea Herald quote (in bold below) makes a lot more sense in context:

    We fully accepted [the DIDA] ordinance, without legal challenge, and complied by closing our facilities every other Sunday for six weeks. Several other large marts, while also initially complying, chose to join together to challenge this Ordinance in the courts.
    From those challenges, the court determined that the Ordinance was drafted, approved and enforced in a manner that violates DIDA, violates the principles of Administrative Law and the principles of equal treatment and due process under the Constitution. The practical effect of these court decisions was to invalidate the Ordinance wherever it had been implemented, causing the restrictions pertaining to business hours and mandatory shut-down days to no longer apply.

    . . .

    As a large mart, Costco believes that the principles of equal protection under the law should apply to all similarly situated parties. And, in light of these recent court rulings, we should also be allowed [to] operate our warehouses on Sunday, just like all other large marts.

    . . .


    Preston C. Draper
    Country Manger
    Costco Wholesale Korea, Ltd.

  • DLBarch

    This story inspires me to report suspected “fire safety, food, and architectural structure” violations of the three Korean markets that line El Camino Real in San Jose.

    Because I’m a firm believer in reciprocity.


  • jkitchstk

    From the English Korea Herald,
    “Even before its worst-ever PR crisis, Costco has long been criticized for turning a deaf ear to consumer complaints. ”

    I doubt this is “it’s worst-ever PR crisis” because their decision to open for business in S. Korea must have included a nightmarish welcome?

    “An executive at a homegrown discount store speculated that the regulation on Costco could fan out to be an international issue as the global warehouse chain must be operating based on meticulous legal consultations in both Korea and the U.S.”

    The Korea Herald should have explained this, since they didn’t, I will…The “international issue” or message is that alien companies are not welcome in S. Korea and Korean companies don’t like alien competition.

  • yuna

    All this for those barrels of peanut butters you can roll down the aisle, and pillowcase sized bags of Hershey kisses, sigh.

    To me Costco is still like a Mijeh ajuma’s (as we used to call those women who sold imported (mainly American) stuff mothership.

  • SalarymaninSeoul


    also about the meat and cheeses. The selection of cheeses at Costco is worth going there. There are plenty of other reasons, as well. And no, when the big stores are closed, we, at my home, do not go to the small markets instead. We either go on Saturday or on Monday. Its almost a matter of principle with me that I will not be forced by the mayor of this city into shopping where I do not usually shop.

  • yuna

    Yes, I left out the cheese, those taekwondo blocks, much better than those cellophane-wrapped kraft affairs.
    I understand what you mean. Even my father who has spent quite some time in Europe, when he misses cheese, has to go to Costco now. And when I miss the Kraft slices in continental Europe, I go to McDonalds.

  • jk641


    Could you offer any input on this issue?

  • Wedge

    Legislating (rulemaking?) an attempt to get people to change their shopping habits is like legislating against tides. Good luck with that, mayor.

  • CactusMcHarris


    It’s the only place (well, not the only but certainly the cheapest when you buy a wedge) for Parmagiano-Reggiano cheese – you’ll never go back to anything else again, I guarantee you (unless it’s Kefalotiri on top of Spaghetti Bolognese).

  • enomoseki

    Tesco or Costco?

  • thekorean

    Could you offer any input on this issue?

    Not really. I am perfectly neutral on this issue. I see Costco’s point, and I see the lawmakers’ point also. I don’t feel that one has a better argument than the other.

  • Anonymous_Joe

    #1 madar: “I have to assume they nit picked over items that would never be cited under normal circumstances, as their totally perfect application would be too rigorous to allow a business to function in the real world.”

    Their hanshikdang don’t operate in the real world; they’re in my worst nightmare.

  • SalarymaninSeoul

    Who is talking about processed cheese slices, Yuna? E-mart, Home Plus, and other Korean stores have horrible cheese selections, and Costco at least offers more than Philadelphia, processed slices. It also offers a better selection of meets and cold cuts.

  • SomeguyinKorea

    I’d rather go hungry than shop at those old dingy markets. Call me a snob if you like, I just don’t enjoy having diarrhea.

  • SalarymaninSeoul

    The new mayor will make you shop there.

  • jk641

    TK @47,

    Okay. Thanks.
    So we’re in agreement that it’s not Koreans being nationalist asshats against an American corporation.

  • SalarymaninSeoul


    Its a socialist asshat thinking he can legislate “social justice.”

  • jk641

    I wish there was a way to help the small local stores.
    But this is a problem in the States as well. Everyone just shops at big box stores.
    (It’s just more convenient. Esp. these days when everyone’s strapped for time. Also, the internet shopping boom has to have had an effect on the mom-and-pop stores too.)

    But I have to think that small stores in Korea must have an advantage over their counterparts in the US, in that in Korea people travel on foot more than Americans who just drive everywhere.

  • SalarymaninSeoul

    #54, why should we help them? You know, no one is entitled to success in business. In fact, failure is more common than success; this is only natural. How do you want to help the smaller stores? Smaller stores need to find a way to compete instead of being lazy and demanding the government to protect them. Make it more convenient to shop there. Offer something that would make people want to spend their money there instead of the larger stores. What you have now is a socialist mayor thining he can force people to shop where he thinks they should shop. In theory, they should, as you say, have an advantage. Its a hassle to have to drive 45 minutes to a large discount store. But they do not capitalize, for the most part, on this advantage. One thing I like about some of the stores in my area is that they deliver what you bought to your home, free of charge. This allows my wife, who does not drive, to go shopping alone. Otherwise we would ONLY buy at Home Plus or E-Mart on he weekends. There are, of course, other issues, but the point is that its up to the stores to make themselves more competitive, not the government.

    Costco, though, is a different beast. While the little shops may be competing for the same customers, offering substitute products as E-Mart or Home Plus, Costco sells unique merchandise and is in a market niche all of its own.

  • jk641

    Salaryman @55,

    I’m no fan of Mayor Park.
    I’m not trying to defend him.

    Just pointing out the economic trends and the fact that it’s getting more difficult for small stores to survive.

    Just out of curiosity, what are your thoughts on the US’s Wall Street bailout and GM bailout and such?

  • Pingback: Good post on the Distribution Industry Development Act()

  • gbnhj


    Yes, you’re right about small shops in Korea having a greater relative advantage, due to the country’s higher population density. Also, I appreciate your sympathy for small business owners. I am a so-called ‘shutter-man’ for a retail outfit which has done quite well, but which faces competition from a nearby mall. Our solution (it’s my wife’s shop) is to truly provide for the customer, in terms of price, quality, selection and service to an extent that the larger retailers can’t. We don’t sell produce, but this strategy is useful for even small produce vendors facing competition from big box stores.

    Importantly, you need to know your customers, and offer them things that they want. Once small retailers start caring about what they sell, and also start caring about what their customers want and need, and further start actually caring about their customers’ satisfaction, then they have a lot less to fear from some anonymous big box retailer. If you ask me, the difference between success and failure among small retailers here is more greatly the result of their actions (or inaction), than it is the added pressure of a large retailer in their market.

  • SalarymaninSeoul

    My thoughts I think would be in line with my belief that it isnt the job of the government to bail out and protect anyone, and it certainly isnt the job of the government, though it has claimed that role by force, to slush money this way and that way.

  • jk641

    My feelings on the bailouts are mixed.
    While I’m glad that the American financial system didn’t melt down and GM is still making cars, I can’t help but think that the countless small businesses which go under every year probably wish they could’ve gotten bailouts too.


    Best of luck to you, your wife, and your store.
    These days small business owners need to be smarter than ever, and really think from the customers’ point of view.
    Ones who do will surely continue to do well.

    Okay, time to sleep.

  • SalarymaninSeoul

    No business is too big to fail, and I would have let them all fail. The biggest problem as far as I see it is the moral hazard involved in having a safety net that funnels you money whenever you screw up. Risk is a factor in business, and when you get rid of risk by saying “if you screw up, dont worry, if youre big enough, we will bail you out,” then you give people the carte blanche to take on stupid risk.

  • geronl

    ?? The other chains are allowed to sell on those days?

    Why the discrimination??

  • geronl

    I don’t think the government should be propping up failed businesses at all. The government should only raise revenue to fund necessary government operations.

  • SalarymaninSeoul


    that leave open the discussion: what are those necessary government operations?

  • Maximus2008

    Did you guys see one of the latest issues of Seoul magazine (championed by our almighty Mr. Marmot) ? I mean, those of you who live here and understand things for real, not those kyopos pretending to know what the heck is going on…

    In that magazine, you can see that:

    a) most of the owners on those traditional markets say that the closing of big markets on 2 Sundays/mth didn’t really help them (they say that ppl who buy on the big shops will continue to do so);

    b) one of the adjossis (owner) said that they need to improve service a lot in order to attract/keep customers coming. And he was very clear on saying that they need to be more amicable, and they are not doing a good service today;

    And that’s quite a stupid “rule”. You just change the day you go buy your stuff.

  • thekorean

    So we’re in agreement that it’s not Koreans being nationalist asshats against an American corporation.

    We are in agreement, notwithstanding what the usual morons of this thread are saying.

  • slim

    As a fairly frequent H-Mart customer in the DC area of the US, I often wonder if that excellent (for consumers) outfit could withstand tough scrutiny on labor laws and other matters. I have no deep knowledge of what they do, but the significant price edge they enjoy over big US markets has to come somehow.

  • cm

    Aren’t H-Mart owned by Korean American businessmen? I don’t think what they do, effects South Korea.

  • Q

    Financial News (Korean language) interviewed customers at Costco. Majority of them said they will keep coming to Costco regardless of recent legal conflicts. They are satisfied with that Costco’s customer service of returning policy and good quality of products of competitive price.

  • Anonymous_Joe

    Does Korea have the equivalent of an equal protections clause or dosen’t it?

    Korea Herald, Daniel Fiedler: Costco and comparative law:

    …South Korean lawyers and law students are steeped in a civil law tradition imported from Japan that finds its roots in 19th century German and French law; both of which have as their foundation the law of ancient Rome.

    In this civil law system legislative enactments reign supreme and courts are generally prohibited from applying equity-based concepts that could introduce uncertainty into the law. Further the decisions of ordinary courts have no particular force beyond the parties to the controversy.

    …Thus South Korean judges methodically follow the law as set forth in legislation enacted by the National Assembly and use deductive reasoning to apply this law to each specific controversy.

    These courts are generally not empowered to consider equitable concepts and they do not engage in analogous or inductive reasoning based on prior judicial decisions. Most important, they do not expect their decisions to be cited as authoritative statements of law by other courts or to be relied on by individuals or entities not involved in the litigation.

    Thus when the Seoul city government argues that an administrative court decision invalidating a government regulation does not apply to a non-litigant such as Costco it is merely following that ancient civil law tradition. For the law students, lawyers, judges and even average citizens of South Korea the action of the government is self-evident. However it has become obvious that the Seoul government officials, as well as many South Korean commentators, are struggling to understand why Costco has been violating the regulation for the last few weeks without any discernable remorse or shame.

    The answer to this quandary is the common law legal system of the United States to which the managers and directors of Costco are accustomed. In the common law system, court-made law is as extensive in scope as legislative enactments and often legislative enactments merely reflect the rules of law developed in prior court decisions. These courts have the power to consider concepts of equity and often use these concepts to modify or expand on what might otherwise be harsh legislative rules. Common law courts have the power to strike down legislation as unconstitutional and to reject regulations as invalid.

    Most significantly, when a court strikes down legislation or declares a regulation invalid that decision applies equally to all similarly situated individuals whether or not they were litigants in the original court action. Thus for the managers and directors of Costco, coming as they do from the common law jurisdiction of the United States, the idea that a government regulation deemed invalid by a court would still be applied to similarly situated non-litigants is illogical and highly offensive to their concept of equal treatment under the law.

    Thus Costco has engaged in what it views as legally justified action in disregarding a regulation already deemed invalid by a competent court. Meanwhile the Seoul city government has similarly engaged in what it views as a legally justified action in attempting to enforce the regulation.

    …when the Seoul city government found the remedies set forth in the regulation to be insufficient to deter Costco’s actions, its response of sending in inspectors as a retaliatory action only fed the narrative of South Korea as anti-foreigner. At a time when South Korea is trying to polish its international image, the last thing it needs is another situation like the Lone Star case where the foreign consensus again develops that the country is unfriendly to foreign business and investment.

  • Q

    Seoul Administrative Court declared that Costco is allowed to open on Sundays until the verdict is determined: