November 29, 2024

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K&K Global Trading Co. President Ko Sang-goo poses for a photo during an interview with The Korea Herald. (Park Hae-mook/The Korea Herald)

Administrative and financial support to over 7 million ethnic Koreans living outside South Korea has largely remained insufficient, despite their contributions to the growth of Korea's export-driven economy, claimed a supermarket boss who runs over 130 stores in Vietnam.

"Businesses run by ethnic Koreans overseas have been at the forefront of the Korean economy," said Ko Sang-goo, president of the Vietnam-based K-Market supermarket chain operator K&K Global Trading Co., in a recent interview with The Korea Herald in Seoul.

"It is worth noting that it’s the Korean diaspora who extend the footprint of corporate Korea."

Currently, the Overseas Koreans Foundation is in charge of diaspora engagement with a 70.7 billion won ($54.1 million) budget this year for 7.32 million ethnic Koreans overseas -- with some 2 million of them having voting rights in Korea.

This is in contrast to the size of the state budget allocated to those living in Korea. For example, some 2.6 million residents in North Gyeongsang Province have been beneficiaries of a combined 11.2 trillion won budget for 2022 across the region.

Such a contrast has long raised calls for the Overseas Koreans Foundation, a body affiliated with the Ministry of Foreign Affairs, to be elevated or replaced with a state-run agency that ensures consolidated support to the Korean diaspora spanning across some 180 countries.

Lawmakers in Korea have sought to revise the rules in order to set up the agency. Following the conservative government's declaration on Oct. 6 that it would do so, the ruling People Power Party’s Rep. Joo Ho-young and 114 other lawmakers proposed a bill for the agency on Oct. 7. Creating such a body was part of President Yoon Suk-yeol's election campaign promise in March.

The bill stopped short of passing the parliament at the regular session on Dec. 9 due to political strife over other agenda items in the bill, including abolishment of the Ministry of Gender Equality and Family.

The retail mogul, however, cast a rosy outlook for the passage of the bill sooner or later, given that the government announcement is a binding one.

"A new independent agency will allow (Koreans) overseas to enjoy streamlined administrative work related to diaspora engagement, and the range of support could become broader," Ko said.

K&K Global Trading Co. President Ko Sang-goo poses for a photo during an interview with The Korea Herald. (Park Hae-mook/The Korea Herald)

Ko, 64, is one of the Korean entrepreneurs blazing a trail overseas. Starting from scratch in his 40s in 2002, Ko now runs 129 Korea-themed upscale supermarkets across Vietnam, as well as six snack bars and a bakery.

The supermarket brand K-Market has not only led the promotion of Korean food to consumers in Southeast Asia’s fourth-largest economy, but has also created jobs there. It hires some 1,400 Vietnamese staff nationwide, who account for a majority of the company’s some 1,500 total employees.

But Ko -- like others doing business outside Korea -- has often been ineligible for receiving financial incentives to expand his business that those doing business in Korea are. These range from low-interest loan programs by the state or banks that could help reduce the cost of borrowing, to COVID-19 disaster relief funds – putting overseas business owners like him on uneven ground.

"Ethnic Koreans overseas are valuable assets that the Korean government could take advantage of," said Ko, who formerly led the Korean Society of Hanoi.

"The country of origin should take more responsibility for helping ethnic Koreans living outside Korea, in order to let them fulfill their duty to contribute to Korean society in a show of loyalty." 

Game-changing plans

On the local front, K&K Global Trading has long taken advantage of Vietnam’s growing purchasing power.

Two decades ago, K-Market’s imported products mainly from Korea were initially meant to target middle- and high-income earners in Vietnam.

In light of this, K-Market stores maintained bright lighting during operating hours, spearheaded the adoption of cold chain logistics, hired security guards and surveillance systems and allowed consumers to order goods online and pick them up at a designated K-Market location – concepts quite new in Vietnam back in the early 2000s, according to Ko.

Such efforts to elevate the in-store experience turned out to be a winning localization strategy for K-Market in the fast-growing economy.

The exponential growth of the Vietnamese economy – with real gross domestic product increasing about 5 percent each year for two decades, or 1.7 times faster than the global average – allowed the K-Market brand and Korean goods to be more accessible to consumers with their standards of living generally improving.

At K-Market’s nascent stage, some shoppers did not spend much time in the store because they assumed that prices would be too expensive, Ko said.

"Now that the Vietnamese economy is growing, we have been able to target a broader range of consumers. When K-Market first started, we mainly targeted middle- to high-income earners, but now even students come to shop at K-Market now."

An interior view of K-Market in Vietnam (K&K Global Trading Co.)

Ko is now stepping up his game with plans to adapt to such shifting sands, in part by strengthening its logistics capacity.

K&K looks to complete its second Vietnamese food distribution center on a 30,000-square-meter site near Ho Chi Minh City by August 2023, following one on the outskirts of Hanoi built in 2019 on a 20,000-square-meter lot.

Once full-fledged, more retail and accommodation brands will be able to enjoy distribution services provided by K&K's logistics infrastructure. So far, retailers Big C, VinMart, Lotte Mart and Aeon Mall, as well as luxury hotel brands such as JW Marriott, InterContinental and Lotte Hotel have partnered with K&K for food distribution.

Currently, six out of 10 clients for K&K's distribution infrastructure services are corporate -- and Ko is aiming to grow the proportion further.

"We are looking to expand business with corporate clients,” Ko said.

Furthermore, in addition to its flagship supermarket chain, K&K looks to add more snack bars under "Food Story" by selling Korean and Vietnamese dishes together, a move designed to cater to the growing demand from morning commuters in Vietnam.

"Most of our shops are located near apartment complexes," Ko said. "A growing number of apartments in Vietnam will expand K-Market's business territory."

By Son Ji-hyoung (consnow@heraldcorp.com)