Bom Kim amassed a fortune at Coupang Inc., the Amazon of South Korea, that reached as significantly as $8.9 billion, and became the poster youngster of a new type of wealth generation in the nation: self-made riches from the technologies world alternatively of the dynastic hoards of decades-old conglomerates.
Much was made about how the new breed of titans was unique, more prepared to give back to society and more considerate of staff. Coupang, for instance, promised employees and frontline workers about $90 million in stock awards when it listed in New York in March.
But just months just after its blockbuster initial public providing, the e-commerce giant is beneath stress for a series of controversies, and some South Koreans are reconsidering their attitude to the billionaire and his business.
Coupang is facing renewed criticism from labor unions and clients about working circumstances, with the trigger getting a deadly fire at a fulfillment center in June. Daily customers of Coupang’s app dropped by more than 700,000 at one point amid a boycott of the business following the blaze. An ill-timed public statement — the similar day as the accident — on Kim’s move to step down as chief of the Korea company was extensively viewed as an try to shirk duty, adding to the outrage.
“Self-made entrepreneurs are becoming part of the privileged class,” stated Park Sangin, a professor at Seoul National University’s Graduate School of Public Administration. “They are becoming a new type of chaebol,” he stated, referring to the country’s family-controlled conglomerates.
In an emailed response to queries from Bloomberg News, Coupang stated it cares “deeply about the welfare of all employees” and requires its “responsibility to protect their health and safety seriously.” It also strives to realize more equality at the workplace by granting “an enormous amount of equity to workers, creating wealth for all” its staff and also in the broader society by offering help for little- and medium-sized enterprises, it stated. On Kim’s resignation from the Korean company, it stated the adjust became public by means of a government web-site prior to the fire, and the timing of the announcement was just a coincidence.
Billionaires about the world are no strangers to criticism targeted at their vast wealth. Jeff Bezos has faced a backlash against what critics contact poor working circumstances at Amazon.com Inc. and for firing staff who protested. Facebook Inc.’s Mark Zuckerburg has come beneath fire for the social media giant’s influence on politics and society.
But the predicament is more nuanced in South Korea. While the country’s family-controlled chaebol stay unpopular, getting been embroiled in scandals and corruption instances, there is hope that the new breed of entrepreneur will turn out to be unique — and more prepared to give back to society. Brian Kim, for instance, the founder of mobile-messaging giant Kakao Corp. and now the country’s richest particular person, pledged to give away most of his fortune.
The query for Coupang is whether or not the fire and altering attitudes will hurt its company. The company’s net loss widened in the second quarter just after it spent heavily on expansion and the blaze broken one of its most important fulfillment centers. Its shares are down 7.5% from going public by means of Wednesday’s close. The S&P 500 Index gained 13% in the period. Unless the business fixes its internal culture, it could face an additional crisis that would hit its stock and bottom line, stated Suh Yonggu, a professor of promoting at Sookmyung Women’s University.
Kim, 42, was born in Seoul and moved to America as a youngster, later getting U.S. nationality. He returned to South Korea and began Coupang in 2010 just after dropping out of Harvard Business School.
Today, Coupang is the most-utilised purchasing app in South Korea, and one of the country’s greatest employers. Revenue pretty much doubled last year to $12 billion as demand for on the web purchasing surged throughout the pandemic.
Backed by Masayoshi Son’s SoftBank Group Corp., Coupang raised $4.6 billion in its IPO, in spite of posting losses for years. It surged on its initial day of trading. While Kim’s wealth has fallen from its peak, he’s nevertheless worth $5.7 billion, according to the Bloomberg Billionaires Index.
On June 17, a fire broke out at a fulfillment center in Icheon, outdoors Seoul, killing one firefighter. Local media reports, which linked to CCTV footage, stated the blaze appeared to have been sparked by an electrical fault. The footage also seems to show that sprinklers did not right away activate.
Police arrested staff of a business that managed electrical and fire security at the warehouse for allegedly turning off fire alarms and delaying the activation of sprinklers. The case was sent to prosecutors just after the investigation ended in late July, according to a police officer at Gyeonggi Nambu Police Agency who asked not to be identified, citing agency policy.
Coupang apologized to these impacted by the fire and promised to provide lifetime help to the family of the firefighter who died. The business did a thorough investigation and denies allegations that the safety guards dismissed any fire warnings, it stated in its emailed response to Bloomberg News.
The incident prompted a boycott of Coupang’s services, with everyday customers of the company’s mobile app falling to about 7.9 million on June 26, down from about 8.6 million on the day of the fire, according to information from South Korean market place analysis firm Mobile Index. The quantity has because recovered. Coupang stated on its earnings contact last week that clients who made purchases in the second quarter improved 26% from the earlier year to 17 million.
Hyeon-woo Lee, 34, stopped applying Coupang just after the fire. He had initially been a fan since he believed the business treated workers more relatively, he stated. But now Lee concerns whether or not that is correct.
“I was happy with Coupang’s services,” he stated. “But if they are inconsiderate of their workers when providing such services, I doubt whether it’s valuable to use them.”
The fire compounded criticism that the comfort Coupang delivers, such as assured next-day delivery, is coming at the expense of workers.
The business has kept workloads down for frontline staff even even though worker hours in the logistics business have ballooned, it stated in its response. Its frontline workforce work “well under 50 hours per week on average in an industry where 72 hours per week is the norm,” it stated. It accomplished this by applying technologies and its nationwide network of more than one hundred logistics centers, and by drastically expanding the workforce, it stated.
Still, most warehouses do not have air-conditioning or heating, so staff preparing goods for shipment have to rely on a handful of fans and air circulators, stated Min Byeong-jo, who operates at a Coupang fulfillment center outdoors Seoul and heads a labor union for the company’s warehouse workers. Employees are not permitted to bring phones onto the workplace floor, he stated.
“We feel like we’re being treated like machines,” Min, 55, stated. For Coupang, “products are the most important things,” he stated.
Coupang stated in response that air conditioners and big fans have been installed according to the predicament of each and every space in its distribution centers. Fulfillment centers across the world, as a frequent policy, do not let the use of individual cell phones on the floor to avoid accidents, it stated. Many other organizations, specially manufacturing plants, have some level of restrictions on phone usage in the workplace.
Coupang stated it has been at the forefront of developing “a new working environment for the logistics industry.” It stated it guarantees shorter working hours, hires frontline workers straight, and delivers paid vacations and breaks, as properly as positive aspects.
Coupang’s labor union says nine workers, like two subcontractors, have died due to working at the business because the starting of last year. Coupang stated although the logistics business in South Korea has had more than 1,300 work-connected deaths in the last 10 years, it only had one. It added it has spent $200 million and hired 600 security pros to enhance the overall health and security atmosphere for its workers.
The one death that has been officially acknowledged as such was that of Jang deuk-jun, 27. He died of a heart attack last October just after returning from work at a Coupang fulfillment center in Daegu, a city south of Seoul. An investigation by the Korea Workers’ Compensation & Welfare Service stated he died from overwork just after clocking more than 62 hours in the week of his death.
A Coupang spokeswoman stated that the actual quantity of hours worked was 48.5, but the government counts nighttime work at a a number of of 1.3 for each and every hour worked.
The business apologized and presented condolences in a press statement just after the government probe. It also promised to provide help for Jang’s family.
But Park Mi-sook, Jang’s mother, stated that months just after the investigation ended, Coupang hasn’t supplied any compensation. In its response to Bloomberg News, Coupang stated it has attempted numerous instances to communicate straight with Jang’s family to offer you condolences and help, devoid of mentioning the family’s reaction. Park stated she feels absolutely nothing has changed.
“We thought things would be different once we proved our son died because of work,” she stated. “We wanted to prove it at all costs. But even now, Coupang hasn’t changed.”
In May, Coupang launched Coupang Care, which it calls the industry’s initial paid overall health promotion plan in South Korea that makes it possible for staff with comparatively higher overall health indicators such as blood stress and blood sugar to get as several as 4 weeks paid time off to focus on their overall health.
Also beneath the spotlight was Kim’s resignation as chairman of the board and as a director of Coupang Corp., the South Korean company operation, powerful May 31. He remains chairman and chief executive officer of Coupang Inc., the Delaware-incorporated and U.S.-listed parent business.
The move could assist Kim stay clear of accountability beneath South Korean laws and regulations, according to Seoul National University’s Park.
“Bom Kim in effect controls the company,” he stated. “Removing his titles seems like a move to avoid the risk of any punishment.”
Kim’s resignation from the board had been planned for months, the business stated. It was a organic step to take as he focuses on Coupang’s worldwide operations, it stated.
South Korea’s Fair Trade Commission has also targeted Coupang for unfair trade practices, slapping a fine of 3.3 billion won ($2.8 million) on the business this week. Coupang stated it would file a suit against the choice.
To be sure, Coupang is not the only swiftly increasing e-commerce business facing criticism about worker therapy. Besides complaints by Amazon staff about grueling circumstances, meals-delivery platform Ele.me, owned by Chinese e-commerce giant Alibaba Group Holding Ltd., also faced a public backlash earlier this year just after the death of a delivery driver. And Chinese meals-delivery business Meituan came beneath fire on the web just after numerous delivery riders had been killed or injured although attempting to meet strict deadlines.
But that does not absolve Coupang of duty to address its problems, according to one South Korean ruling party lawmaker.
“The ‘Coupang crisis’ should end here,” Woo Won-shik stated in a statement last month. “It should reconsider its overall corporate culture.”
–With help from Abhishek Vishnoi, Peter Pae and Pierre Paulden.
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