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Business welcomes Gsomia decision but is not ready to celebrate yet

Nov 28,2019
Businesses are somewhat optimistic on signs of a thaw in Japan-Korea relations, but they are not counting the sales before they are made as the two countries remain at odds.

Last week, Seoul said that it would not immediately scrap the General Security of Military Information Agreement (Gsomia) after months of tension with Tokyo.

The abeyance of the cancelation has cheered up retailers, distributors and others caught up in the geopolitical drama. With customers shunning Japanese items and shops carrying the items seen as unpatriotic, sales have been hit.

Industry insiders warn that a full recovery may take some time as relations between the two countries are far from settled and some customers may still curtail their purchases.

Sales of Japanese automobiles have already started to bounce back, and the automakers are optimistic that an ending of the Gsomia affair will further help move vehicles off the lots.

Sales of Toyota Motor in Korea dipped 73 percent to 374 vehicles in September compared to 1,384 units sold in June. But last month, sales slightly improved to 408 units. Sales of Nissan Motor’s Infinity totaled 175 units in June but went down to 48 units in September. In October, the figure climbed to 168 units. Sales of vehicles from Honda Motor jumped fivefold last month to 806 units from 166 units in September.

Discounts played a role.

“If Gsomia ended, sales of Japanese cars could have dipped further since the relations could have become sourer,” said a spokesperson from a company that imports foreign vehicles. “We are able to avoid the worst situation for now.”

Beverage companies are still on the defensive.

“Although it’s true that the political issues have affected product sales, Chum-Churum is a Korean alcohol beverage that is manufactured, distributed and sold in Korea,” said a spokesperson for Lotte Liquor, which is connected with Japanese companies under the Lotte name. “With the Gsomia extension as a stepping stone, we plan to intensify our marketing strategy to actively communicate with consumers and clarify the inaccurate information.”

Lotte Asahi Liquor, which imports Japanese beers to Korea, is still highly cautious.

On-year sales of Asahi beer in the third quarter dipped 70 percent to 14 billion won ($11.9 million). “We’re still observing the situation with time,” said a spokesperson for Lotte Asahi Liquor. “It’s a little too early to make presumptions.”

Airlines are looking for improvements after reducing frequencies and cutting services to Japan.

“[Airline industry insiders] hope effects on sales will be minimized with the opening of a new discussion channel between the two countries following the Gsomia extension,” said a spokesperson for Eastar Jet.

“Although the effects weren’t as large as for low-cost carriers, we’re carefully observing the situations since [Korea-Japan relations] could affect our decision to allot routes,” said a spokesperson for Asiana Airlines.

“It’ll be difficult for companies subject to boycotts to recover sales for now in that the issues like Gsomia and export restrictions, which are the reasons for the two countries’ conflict, still haven’t been concluded,” said Lee Eun-hee, professor of consumer science at Inha University.

“But the conditional extension of Gsomia could give a voice for people who try to make practical choices, which could overcome the boycott movement.”

BY MOON HEE-CHUL [jin.minji@joongang.co.kr]