Preston Draper Costco Korea’s country manager

By Lee Hyo-sik

Costco Wholesale Korea, the Korean unit of the U.S. chain, is vowing to operate on Sundays, despite a 30 million won ($27,000) fine imposed by three Seoul district offices for having ignored the city ordinance that requires large retailers to close every other Sunday.

Its decision is expected to spark another round of battles with the Seoul Metropolitan Government and district offices, concerning municipalities’ action designed to boost business for smaller mom-and pop stores and traditional markets, which have lost customers to retail giants over the years.

Costco posted a notice on its website (http://www.costco.co.kr/) Thursday, saying it will not abide by the ordinance because it is ``discriminative’’ against the company and has caused substantial losses to the wholesaler’s members, employees and suppliers.

``We had initially decided to follow the city guidelines and closed stores every other Sunday for the first six weeks. But following court rulings that the ordinance mandating the closure every second and fourth Sunday was illegal, we decided to resume our Sunday operation,’’ said the statement issued in the name of Preston Draper, Costco Korea’s country manager.

Early this month, Costco sent a letter to the Seoul government saying it will open every Sunday. The wholesaler said its decision is justifiable because the ordinance was ruled illegal by the court.

It was suspended in dozens of municipalities nationwide after domestic retail giants ― E-mart, Lotte Mart and Home plus ― filed lawsuits against the regulation.

The courts allowed the stores to operate until legal ordinances were promulgated. In some districts, the courts said they contained procedural errors.

Following the court decision, the three major competitors to Costco resumed Sunday operations. And Costco’s three outlets in Seoul and five in other cities did so, too.

However, Seoul city has argued that Costco outlets cannot claim the same status of its three rivals without joining the lawsuit.

On Sept. 12, Jungnang, Seocho and Yeongdeungpo ward offices imposed a combined 30 million won fine on the wholesaler’s three stores that opened on Sunday.

But Costco claims that the rules are unenforceable following the recent rulings by various courts that declared ordinances mandating the closure illegal.

``Just because we did not take part in the lawsuits, barring us from opening stores on Sundays is unfair. Court rulings should be applied to all retailers,’’ Thursday’s notice read.

Under the ordinance, a company caught for a first violation of the rule faces a 10 million won fine; 20 million won for a second violation; and 30 million won for a third.

The American wholesaler operates eight stores here, three in Seoul and one each in Daegu, Daejeon, Ilsan, Busan and Ulsan. Tapping into the Korean market in 1998, Costco posted 2.086 trillion won in sales last year and 130.8 billion won in operating profit.