Plans by Korea's largest retailer to open a pair of gas stations is creating a big stir in the market.
Drivers are welcoming the news but E-Mart's new venture has members of an association of gas station owners crying foul.
Lee Jeewon tells us why.
Korea's first and largest discount retailer, E-mart, is revving up to enter the gas station industry.
The Shinsegae subsidiary plans to get gasoline from SK Networks and have direct control over the stations it'll run.
The chain aims to open two gas stations this year, one near the capital Seoul and another in South Gyeongsang Province.
While E-mart has more than 110 stores nationwide, it can open only up to six gas stations in accordance with current regulations.
There is yet another hurdle.
The company plans to cut its profit margin to lower the price of gasoline by 100 won or 10 US cents per liter.
While consumers will likely welcome the news of cheaper gasoline existing gas stations are furious.
''The profit margin for gas stations is a mere 1.4 percent on average. Taking that into account, bringing down gasoline prices by fueling price competition among retailers rather than suppliers can be a big blow to independent gas stations.''
The association elaborates that the idea of encouraging competition among retailers is not in line with the government's initial approach to easing refined oil prices.
Seoul's plan was to promote price competition among the country's four main suppliers, namely SK Energy, GS Caltex, Hyundai Oil Bank and S-Oil, not among gas stations, per se.
Although contact between the association and discount store chains has taken place a number of times on the matter neither side has released an official statement yet.
The oil association is scheduled to come up with a resolution next Tuesday.
And while E-mart declined Arirang's request for an on-camera interview, its PR department did say the company is positively reviewing the new venture.
The retailer describes the project as just lending space to another tenant and not delving into a different industry.
And because of the limited number of stores it can open, it said its new (quote-unquote) ''tenants'' won't have a significant impact on the already existing 13-thousand gas stations nationwide.
[REPORTER : ] ''E-mart is vying to set up two filling stations this year with Lotte Mart and Home Plus also expected to jump on the bandwagon. But with strict regulations and protest from existing stores, the road to setting up those businesses will be a rocky one at best.
Lee Jeewon, Arirang News.''
AUG 04, 2008
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Arirang Town
Wednesday, FEB 10, 2010, (KST) 
