South Korean boycott hammers sales of Japanese consumer goods

South Korean boycott hammers sales of Japanese consumer goods

August 2, 2020 0 By administrator

TOKYO — Japanese brands from beer to clothes were walloped by a boycott by South Korean consumers last year — but tech names stood out for their resilience, according to data assessing the effects.

The boycott was sparked a year ago when Japan’s government imposed curbs on exports of chipmaking materials needed by South Korean semiconductor producers such as Samsung Electronics and SK Hynix. Although Tokyo says the restriction was prompted by concerns over South Korea’s own export restrictions, some see the move as related to South Korean court rulings that allow assets of Japanese companies to be seized and used to compensate Korean victims of World War II-era forced labor.

Tokyo’s action sparked a strong response by South Korean consumers, who began to shun Japanese products — in some cases with severe financial effects.

According to Seoul-based research company CEO Score, the combined operating profits of 31 Japanese consumer companies in their South Korean businesses plunged 71.3% to 145.9 billion won ($121 million) in 2019, compared with the previous year.

The companies’ combined revenue fell by 6.9% to 7.9 trillion won during the same period.

The biggest impact has been on companies with products more easily substituted — even if those brands had begun to inspire consumer loyalty.

“Until now, politics and consumption of daily necessities were different, but our beer that had been the bestselling imported beer in South Korea, for eight consecutive years until 2018, has dramatically decreased,” Asahi Group Holdings CEO Akiyoshi Koji told the Nikkei Asian Review in December.

Lotte Asahi, where products include sales of Japan’s Asahi beer in South Korea, was worst hit among the companies assessed. Its sales fell 50.1% to 62.3 billion won in 2019 while the local unit recorded 19.8 billion won of operating losses, according to CEO Score.

Oryoon Lee, an analyst at Euromonitor International, told Nikkei that low sales at convenience stores had a big impact.

“Convenience stores account for the largest share of beer sales in South Korea,” Lee said. “Leading convenience store chains like CU and Mini Stop returned or cleared their Japanese beer inventories due to low sales.”

He said the boycott of Japanese beer was still gaining steam. According to Euromonitor, China’s Tsingtao has now overtaken Asahi as the top selling imported beer, with Heineken climbing from third to second.

Exports of Japanese beer to South Korea declined 49.2% to 4 billion yen in 2019 from the previous year, government trade data shows.

Although the South Korean market made up around 55% of Japan’s beer exports in 2019, the impact of losing their nearest overseas market is limited for Japanese brewers. Japan exported 116 million liters of beer in 2018, equivalent to only 2.3% of total domestic beer production, according to the National Tax Agency and Japan’s Brewers Association.

Nevertheless, South Korea was still an attractive market because of shrinking demand for beer at…

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