Local Watchers Say Global Franchise Opening in North Still Premature | Be Korea-savvy

Local Watchers Say Global Franchise Opening in North Still Premature

(image credit: Korea Bizwire)

(image credit: Korea Bizwire)

SEOUL, Jun. 15 (Korea Bizwire)Better relations between North Korea and the United States could open up the hermit state to Western brand franchises, a notion that local industry watchers said Friday is possible but premature at this stage. If such a day does come, decisions and preparations would be made by the overseas headquarters of such brands, not by South Korean offices, they said.

Foreign press have picked up the idea, suggesting that global names like Starbucks and McDonald’s may find their way into Pyongyang someday, which would also carry a symbolic meaning. But local watchers say the process is not that simple.

“(Koreans) are one people, but from the perspective of headquarters, North Korea is a ‘country,’ so pursuing (a North Korea store) by a South Korean office would be difficult,” an industry official said.

Starbucks is present in more than 70 countries worldwide. All its stores in South Korea are fully operated by the headquarters, and decisions to open a new store are subject to minute consultations with the U.S. main office.

“The U.S. 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,” another official said. “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 Korea branch of McDonald’s said there are no plans to open a store in North Korea, adding there were no instructions from the head office.

“If such plans are pursued in the future, any process will be handled at the level of the U.S. head office,” an official said.

Local fast food chain Lotteria said it too wasn’t 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.


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