SEOUL, Nov. 24 (Korea Bizwire) – South Korean companies are pushing to expand their presence in the Middle Eastern market after suffering backlash from a diplomatic row between Seoul and Beijing over a U.S. missile defense system here, industry watchers said Friday.
Earlier in the day, the Korea Federation of Small and Medium-sized Enterprises (SMEs) held a forum on halal food — food products that are prepared in a specific way according to Island Sharia law — to share strategies on making a foray into the Middle Eastern and Southeast Asian markets.
The local businesses’ efforts to enter the Middle East come in line with moves by the country’s leading retailers, who have been pushing to have a better grasp of the emerging market.
E-Mart Inc., the country’s largest discount chain operator, said Thursday it signed a contract with Saudi Arabia’s largest retail group Fawaz Alhokair to open its beauty brand Scentence in the capital city next year.
Citing a survey by a research firm Euromonitor, E-Mart said the size of the region’s beauty market is expected to double from an estimated US$18 billion in 2015 to $36 billion in 2020.
Saudi’s cosmetics market, among others, is known to have posted an average of 15 percent of annual growth in recent years, according to the Korean firm.
E-Mart plans to run up to six Scentence stores in Saudi Arabia by 2018.
Earlier on Monday, BGF Retail Co., the operator of South Korea’s largest convenience store chain CU, opened a store in Iran, marking the first overseas branch for a local convenience store operator.
The companies’ move to tap deeper into the Middle Eastern market came after they suffered a series of setbacks in China in the face of Beijing’s economic retaliation over Seoul’s installation of the U.S. Terminal High Altitude Area Defense (THAAD) system.
Earlier this year, E-Mart sold its hypermarket stores in China to a Thai company, two decades after it first entered the country, amid widening losses and a worsening business climate.
South Korea’s fifth-largest conglomerate Lotte also decided to pull out its discount store chain Lotte Mart from the neighboring country and is seeking a buyer for its business.
Experts say local retailers should take the latest THAAD fallout as an opportunity to diversify their business portfolios which have heavily relied on the world’s No. 2 economy.
“In the face of China’s retaliation and growing protectionism around the globe, South Korean firms cannot just rely on their old partners,” an industry official said.