E-Mart opens its franchise store in Mongolia

E-Mart opens its franchise store in Mongolia. July. 15, 2016 07:01. by 김성모 기자mo@donga.com. E-Mart has decided to expand its presence in the global market by exporting its brand.

The first E-Mart Mongolia store will be operated by local retailer Sky Trading in the capital of Ulaanbaatar. The Korean retailer will receive loyalties in return for providing its brand, products and consulting services to the Mongolian retailer. This is the first time for a Korean retailer to export its brand to the global market. E-Mart plans to open two stores in Mongolia by 2018.

The first E-Mart store in Mongolia will become the country’s largest hypermarket on an area of 7,603 square meters. Sky Trading covers 90 percent of the capital expenditure, while E-Mart covers 10 percent. The store has a bank, an auto repair shop and a beauty salon as well as a shopping area.

Chung Yong-jin (see photo), vice chairman of Shinsegae Group that operates the Korean retailer, declared that this year will be the beginning of exporting its brand and it would achieve exports worth 20 million U.S. dollars. Korea's top discount chain sees that the launch of its store in Mongolia will mark the beginning of its export plan.

E-Mart has paid attention to the Mongolian market for a long time, while exporting a wide range of products made by Korean small and mid-size companies since 2014. The export volume, which was only around 65 million won (57,200 U.S. dollars) in the first year, jumped to 450 million won (396,130 dollars) last year, and 2.7 billion won (2.3 million dollars) in the first half of this year. No Brand, the retailer’s own brand, is a low-end product category in Korea, but it is a “high-end” category favored by the high income earners in Mongolia.

“While the country has abundant resources, it has few manufacturers and exports a lot of products from other countries. In particular, the products of E-Mart were well-received,” a source from E-Mart said. “We expect our exports would increase significantly after the stores opens.”

“If a retailer opens its store, it can make huge profits when everything goes well, but it has to drop the business if it doesn’t go well,” a source from the retail industry said. “Exporting a brand has a low chance of failure and generates steady profits.”