By Um Yoonsun
E-Mart, South Korea’s largest discount retailer affiliated with Shinsegae Co., focuses on improving its brand image in China by participating in 2010 Shanghai Expo. During the event, E-Mart held an invitation ceremony for major delivery companies and a thesis contest targeted to college students.
Through its booth in the Korean Business Pavilion at the Expo, E-Mart tries to highlight its efforts involved with building familiar stores, bringing top-notch services, good quality products, and convenience maximization. E-Mart pursues its social contribution services and tries to show the company image of environment-friendly management.
In 1997, E-Mart became the first Korean distribution company to open its store in Shanghai. Starting with its first overseas store in Quyang, it founded ten more shops in China over the past ten years. It opened eight stores in 2008, five in 2009 and now has a total of 24 stores ready to greet local customers. “I will make great efforts to solidify management foundations in the country,” said Vice President of E-Mart, Jung Yongjin, who is keen on carrying out businesses in China. He commented that he will focus on the store expansion in China and quality improvement in manpower and profit and loss systems, as well as the centralized purchase and distribution system. Mr. Jung added that it will review the strategy to extend business in China via long-term merger and acquisition and strategic partnership.
▲ Stores Began to Increase As Chinese Trade Market Opens
Compared with the competitors, E-Mart started entering into the Chinese market early on. However, at that time, the condition of entrance was not smooth at all.
Foreign companies were not allowed to have over 50 percent of company shares. Under this circumstance, E-mart started setting up markets in both China and Korea at the same time. The action was brought by the E-Mart’s intention to sharpen its competitive edge in the global market. In late 1997, with Asian financial crisis in the air, multinational distribution firms like Wal-Mart and Carrefour arrived in Korean market. E-Mart started concentrating its energy on the domestic market.
It adopted a strategy to tighten its grip on the Korean market first and then to accelerate store openings in China. Later on, E-Mart gained a firm No. 1 ground in Korea and resumed business in China from year 2002. It picked up store openings in earnest after it set up the second Ruihong store in Shanghai, 2004. Followed by this vigorous move, E-Mart consolidated its position in the Chinese distribution market. A full opening of Chinese trade market served a significant role in speeding store establishments in China. When E-Mart first advanced to the Chinese market, foreign companies like E-Mart had to have local partners to carry out its business. Both E-Mart and its local partner possessed 49 percent of company shares and Chinese public institutions obtained 2 percent. For the reason, it had faced difficulties of choosing the partner long before it even decided a building site. However, in December 2004, the Chinese distribution market became thoroughly opened and this helped E-Mart to expedite its store openings in China.
▲ E-Mart’s Thorough Strategy on Localization
E-Mart has a plan to target Chinese consumers by harmonizing Korean style with local taste. Due to the increasing consumption of Chinese middle class, Chinese people begin to consider a variety of elements in purchasing. They see not only price and accessibility but also its value, pleasant environment, and high-quality services. So E-Mart focuses on what consumers care. To reflect this trend, the interior of the supermarket in China was decorated luxuriously like the one in Korea. E-Mart tried to meet consumers’ needs by preparing high-quality products such as the organic food.
Morever, E-Mart thoroughly tried to achieve localization when running the stores in China. In order to make Chinese customers feel at home, the supermarket chain replaced its store managers with local Chinese citizens.
In 2008, E-Mart China moved its head office from Seoul, Korea to Shanghai, China to strenghten localization in China. As opening markets in China is getting quicker since 2004, the purchasing power enhanced its competitiveness in Chinese market. Moreover, the network of stores’ efficiency enhanced last year as the distribution center opened.
E-Mart’s advancing into Chinese market means the success in localization as well as success in importing good-quality products to Korea. Products through this channel could be sold in relatively 20 to 30 percent lower price than the ones through existing way. Also it was a good example of Korean firm’s success in non-manufacturing sector, it brought good result of introducing Korean products and cultures. Especially, Lock & Lock containers, citron teas and Shin cup noodles are easily found in main supermarkets in Shanghai and Tienjin, China.
Considering the tendency that improving Korean products’ brand image, E-Mart preferentially introduces high-quality goods and brands. Also E-Mart actively introduces quality goods among private label(PL) brands in Korean E-Mart.
▲ E-Mart to Focus on Chinese Market
Opening supermarkets in Korea is harder than in China, and there will not be any dramatic growth because the market is already saturated. However, experts estimate that opening supermarkets in China can be increased up to 4,000 supermarkets. E-Mart planned to focus on Chinese market with high-quality products, localization marketing and training human resources. The success in Chinese market will take a huge role as a dynamic force to be a global company.
So E-Mart is going to open 6 to 7 supermarkets more including the one in Taizhou. During the second half of this year, E-Mart has a plan to establish the second distribution center to contain refrigerated grocery products and frozen food near Shanghai. As taking a differentiated strategy to make clean environment and provide customer-focused services, Shinsegae’s E-Mart tries to be familiar with Chinese people with making social contribution activities, providing community services and participating in environmental movements.
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