Kakao Facing Criticism For Allegedly Pressuring Small Businesses Into Unfair Partnership

Many are calling it an exploitative move.

According to reports by Korean media outlets, Kakao Enterprise, a Kakao affiliate, sent an official letter to small business owners near its office area on April 25, offering a “partnership” that many see as unfair.

The letter was reportedly sent to small business owners near H Square in the Pangyo Techno Valley, Sampyeong. Kakao has multiple offices in this area, including Kakao Entertainment and Kakao VX. The letter allegedly proposed an H Square Neighborhood Discount Partnership, under which Kakao employees will be offered discounts by the businesses in the area.

The letter reportedly laid out some examples for the business owners, such as a specific discount on the total bill amount. The businesses intending to participate in this proposal must send their reply to Kakao in writing, outlining details of what kind of discount they are willing to offer.

The commercial district near Pangyo

In exchange for offering discounts, small businesses will get a sticker to attach to the establishment’s entrance to signify that they fall under this partnership deal. According to Kakao’s letter, this will promote small businesses among their extensive body of employees and help boost sales.

Kakao Entertainment is reportedly trying to reduce its cost, and this proposal is one of the strategies to eliminate food expenses. But the reason why this move has brought forth so much controversy is the already concerning state of small business in Korea. Owners are struggling with instability due to high interest rates, inflation, and exchange rates. A restaurant owner in Pangyo told the media that it is difficult for him to make a decent living as it is, but if he has to sell at discounted prices, it will kill him.

As much as saying yes to this proposal can cause substantial risk for these businesses, owners are also worried about turning it down. They fear that not participating might create repercussions for their image or make them lose customers.

Source: The Financial News

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