Wal-Mart sells all South Korean stores and exits country

Maybe the WalMart brand is not representing the "extravangant" spenders in So. Korea with its main focus on "low prices." So. Korean market is very much hip, or at least they think so. Hence, even if you don't have the money to show for it, you'd show it anyway that you can. It's like the keeping up with the Jones.

it is clear to me that north korea and south korea have reached some sort of deal either peaceful or hostile for a take over. It will probably be very soon and all businesses from other countries will be assemilated or in other word stolen. Bush will be caught by surprise as usual. Walmart will not be!!

If north and south Koreans have reach a deal "they the south Koreans had better have a long spoon when they sit down to dine", because The Devil will eat them. So long bros.

:o(
The ThinkerMan

Why would Wal-Mart be exiting such a potentially lucrative marketplace like South Korea?

Because for most foreign investors, Korea is a land of potential impossible to realize, due to the country's powerful social "immune system".

I live and work in South Korea as a lawyer serving foreign investors. The retail space has always been hard for the foreigners because Korea Inc. doesn't want 'em here, and "well-meaning" officials look for ways to styme them. The major impediment for big-box retailers has been zoning: While a Costco or Wal-Mart might have a devil of a time getting land-use permission for good sites (impact on traffic patterns is always given as the reason for rejection), Korean operators have no trouble moving into the same sites. Also, Korean suppliers are very difficult to contract with, and discriminate against the foreign retailers on trade terms. So the foreign discount stores end up with (relatively) crappy locations, filled with (imported) products different from the products every Korean really wants to buy. And then government inspectors come around constantly seeking "violations" of Korea's unclear and impossible-to-fully-comply-with regulatory scheme.

For example: Costco Korea has only been able to open two stores since 1998 when they acquired the other part of Price Club Korea from Shinsegae Dept. Store (the ones now buying out Wal-Mart Korea's stores to roll into Shinsegae's E-Mart discount stores). At the time Price Club had three stores; now Costco has five, with the last one having opened in 2002. Yet E-Mart barely existed in 1998. By March 2005 E-Mart had 70 stores, but as of today's acquisition, now E-Mart has over 110 stores. Costco and E-Mart vie for the same locations, yet only E-Mart gets permissions to build.

Brendon Carr's comments are pure hogwash and a nice cough-out excuse for Walmart. Facts are, foreign retail chains are popular in Korea. In Seoul there are many TGIF, Bennigans and Pizza Huts.

Futhermore, Tesco, the British supermarket chain, has become the second-largest player in South Korea's $120-billion retail sector, behind only Shinsegae's E-Mart. I know people who have gone to both E-Mart and Walmart and E-Mart beats Walmart hands down in store layout, the value of product as opposed to price tag, and cleaniness. Stop making excuses for corporate America's inability to relate to different markets and tweak their business model.

Regarding Tesco, I am wondering if WangKon936 can tell us whether Tesco went it alone or if the Tesco brandname and know-how are being ridden by some powerful Korean conglomerate. Does it start with an "S", perchance? Yes, it's true that if a foreign entrant buys protection from an entrenched local participant, that company will do better. But ask anyone who really knows about the brain damage involved with that.

I've been a Korean resident almost continuously since 1990, and have directly worked on the zoning issues for a number of foreign investors -- not just in the retail space. I also work on fair-trade enforcement petitions to the Korea Fair Trade Commission. Korean-American investment banker WangKon936's well-written blog breathlessly describes his "first impression" of the country on April 26, 2006. It seems he's in the "honeymoon stage" with his ancestral homeland; I (along with Wal-Mart, and, I would suspect but have no knowledge, Costco) have long since passed the honeymoon and call things as they are.

Brendon,

Thanks for your input. I am most certainly not in a honeymoon phase as I was dying to get back in the states during the second week. However, I will say this. Being raised in a 1st generation home and being able to speak the language fluently, I understand Koreans and Korea in ways you won't be able to, regardless of how long you've lived there.

I stand by my initial thoughts of Wal-Mart's failure in Korea being a primary by product of it's inability to tweak their business model to local tastes. I think the issues of location and zoning laws are minor reasons and in this debate, pretty much a red herring. I mean, Wal-Mart is having problems in Germany and Japan too because they can't adapt to local tastes. Korea is a wake-up call for Wal-Mart. Again, stop making excuses for them.

FYI, LA Times and Bloomberg apparently agrees with me.

http://www.bloomberg.com/apps/news?pid=10000103&sid=a6k3VglTCRe0&refer=us

http://www.latimes.com/business/la-ft-tesco10apr10,1,4521914.story?coll=la-headlines-business

It's refreshing that Ed and I can have a disagreement without it being a flame-fest.

The analysis offered by Bloomberg and LA Times about Wal-Mart's Korea stores being "dark" is, of course, the standard trope. But in actual fact, if Wal-Mart were -- as accused -- slavishly adhering to its US business model, the Korea stores would be brightly lit as well. Dingy, poorly-lit interior is a Korean special.

Discount stores thrive on location and economy of scale. The zoning war starves the interlopers of both.

And Ed, some of us white boys also speak and read Korean, including Sino-Korean characters.