Worst Seoul-Tokyo relationship begins affecting Korean businesses

While South Korea-Japan relations remain constantly low, there are signs that political conflict between the two neighbors spread to the economic realm. Notably, rather than Korean conglomerates, small- and mid-sized Korean companies that are selling products to Japanese consumers, and merchants owning small stores including Korean restaurants have started to take hit.

Jiro Soju, which sells soju liquor products in Japan, saw its sales plummet in the first half of this year. Sales started declining after Japan’s weekly magazine Shukan Bunshun published an article titled “Let’s play the game to make South Korean President Moon Jae-in be internationally ashamed” on January 24. According to the article, the Japanese government considered raising tariffs as a retaliatory measure against the South Korean Supreme Court’s decision that ordered some Japanese steelmakers to compensate Korean slave laborers (during Japan’s colonial rule), and mentioned Jinro Soju and dried laver products from South Korea, as these products account a lion’s share of Japan’s import of these items.

There have always been articles that seek to boost hatred in the Japanese people against Koreans in Japanese magazines, which often seek to increase sales and subscription by publishing provocative articles. But the Shukan Bunshun article inserted Korean President Moon Jae-in’s photo along with an image of the product clearly showing the “Jinro” brand. Immediately afterwards, sales of Korean soju in Japan started tumbling. Shukan Bunshun prints about 680,000 copies, and is widely read by men in their 30s to 50s, who coincide with the age group of people that consume soju. “Falling sales is a problem, but a bigger concern is declining brand value and employee morale,” said Kwon Hong-bong, CEO of Jinro Japan. “Our sales and marketing depend on staff morale for growth.”

As deteriorating bilateral political relations are about to show signs of affecting economic and industrial sectors, tension is rising among Korean businesses operating in Japan. The Tokyo branch of the Korea International Trade Association invited the heads of Japanese headquarters of seven Korean companies to a forum on Wednesday and checked the current situation. “The participants expressed concern that if conflict between South Korea and Japan further escalates, Japanese clients are feared to change their suppliers to firms in China and other countries,” said Park Yong-gyu, the head of KITA’s Tokyo office.

“The prevailing perception is that there is no sense of crisis between Seoul and Tokyo,” said Park Chul-hee, an international studies professor at Seoul National University. Experts expressed concern, saying that the governments of the two countries should place national interest before their administrations, and pool wisdom accordingly.


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