Ruling Party Eyes Mandatory Coexistence Fund for Big-Box Retailers' Dawn Delivery

South Korea's ruling party is reviewing conditions for allowing large supermarkets to operate dawn delivery services, including expanding mandatory contributions to coexistence cooperation funds and requiring distribution network sharing with traditional markets.

An official from the Democratic Party of Korea's Trade, Industry, Energy, SMEs and Startups Committee said on the 9th, "Agreement with small business associations on coexistence measures is a prerequisite for allowing dawn delivery at large supermarkets," adding that "expanding the coexistence cooperation fund was discussed as one of the coexistence measures."

The Democratic Party, government, and presidential office held a high-level consultation meeting in Seoul on the 8th, announcing plans to revise the Distribution Industry Development Act to permit dawn delivery for large supermarkets while establishing coexistence measures to protect neighborhood commercial districts. The Ministry of SMEs and Startups and small business associations are reportedly coordinating their differences through consultations.

The expanded coexistence fund contribution is being discussed at 0.5% to 1% of increased operating profits from dawn delivery services. A Democratic Party policy committee official explained, "A proposal was made to levy at least 0.5% of the increased operating profit from dawn delivery."

The government had planned to expand the distribution industry's coexistence fund contributions since early this year, suggesting measures for increased contributions from large supermarkets linked to dawn delivery could be finalized quickly. According to the government's joint ministry strategy for shared growth between large and small enterprises announced in January, the coexistence cooperation ecosystem "has been built around manufacturing" and "needs to expand across the distribution industry including platforms." The government decided to increase the coexistence fund from an annual average of 266.3 billion won through last year to 300 billion won starting this year.

The government is also reviewing collaboration plans between large supermarkets and small businesses utilizing the retailers' distribution networks. Democratic Party lawmaker Kim Dong-a said in an MBC radio program, "Creative coexistence measures are needed, such as traditional markets jointly using large supermarkets' distribution centers or adding traditional market sections to online sales sites."

The collaboration model between Baemin (Baedal Minjok) and the Korea Federation of Merchants is expected to serve as a reference. Baemin previously developed signature menu items from traditional markets nationwide, including Seogwipo Local Five-Day Market and Daegu Waryong Market, into meal kits for sale on its platform.

However, small business owners—a core support base for the Democratic Party—oppose dawn delivery by large supermarkets, raising the possibility of prolonged discussions on coexistence measures. An official from a small business association said, "They announced permission for large supermarkets' dawn delivery without gathering our opinions," adding, "They say they will establish coexistence cooperation measures, but we cannot agree to proposals from a Democratic Party that has ignored us."