Foreign retail brands face tough path to North Korea

Speculation is growing about foreign retail brands planning to enter the once hermit state of North Korea.

But industry experts warn the path will not be easy.

While foreign press are discussing the idea of a symbolic removal of barriers into Pyongyang for brands such as McDonald’s and Starbucks, local watchers say the process is likely to be driven from offshore rather than South Korea.

“The US head office is certainly the one that will make the decision (on opening in North Korea), and it will probably set up a locally incorporated business,” said a Starbucks spokesman.

“All decisions will be made at the head office because they entail a massive investment, such as in real estate, coffee machines and supply of materials.”

Once the franchise decides to do business in Pyongyang, the South Korean office may be called upon to assist, given its established logistics, personnel and system, for synergy, he said.

The South Korean operator of McDonald’s said there were no plans to open a store in North Korea, and no instructions from the head office.

“If such plans are pursued in the future, any process will be handled at the level of the US head office,” a spokesman said.

Another source said that while Koreans are one people, from the perspective of headquarters, North Korea is a ‘country,’ so it would be difficult for a South Korean office to pursue a North Korean store.

And South Korean fast-food chain Lotteria also said it was not making any plans for North Korea. Lotte Group announced it recently formed a task force for a “northward business” covering North Korea, Russia’s Far East and northeastern China, but the official said Lotteria was not included on the team.

 

  • Original reporting from Yonhap, via Korea Bizwire.

 

 

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