Joie Works Emergency Committee Claims "Those Who Cultivate and Those Who Harvest: The Structure and Blind Spots of Rights Transfer" – "Pioneering is done by SMEs (small and medium-sized enterprises), while the fruits are reaped by large corporations"

*This content was translated by AI.

The 'Joie Works Emergency Committee' (hereinafter referred to as the Emergency Committee), composed of employees of Joie Works, a global brand distribution and curation company, strongly criticized the recurring 'cultivation-retrieval' structure in Korea's domestic distribution and fashion industries and the blind spots in current regulations that fail to protect them.

The Problem of SMEs (small and medium-sized enterprises) Being Transferred to Large Corporations After Cultivation

According to the Emergency Committee, the initial risks of opening a foreign brand's domestic market are typically shouldered by small and medium-sized distributors. Even when sales reach their peak from zero recognition, ownership rights change hands.

The Emergency Committee pointed out that "in this structure, there is virtually no legal mechanism to protect those who cultivated the brand, and within this void, the contributions of SMEs (small and medium-sized enterprises) that built the market disappear without any compensation." The distribution industry also raised doubts about whether this process could truly be achieved solely through large corporations' superior capital and distribution networks, calling for reflection on the possibility of prior behind-the-scenes contact between large corporations and foreign headquarters, as well as structural unfairness.

Previously, it has been a recurring trend in Korea's distribution industry for headquarters to replace distributors immediately after small and medium-sized distributors have turned an unknown brand into a hit. The legal authority to terminate contracts generally lies with the foreign headquarters, and the term 'theft' is merely a claim by some cultivating companies; no legal illegality has been definitively established. However, Joie Works emphasized that regardless of whether individual cases involve illegality, there is clearly a structural flaw in the distribution industry: the lack of compensation for cultivation contributions.

Why SME (small and medium-sized enterprise) Cultivators Are Powerless

The Emergency Committee particularly stressed that early brand cultivators are inevitably powerless because rights transfers fall into a blind spot under current subcontracting laws and agency laws. These two laws assume relationships between domestic prime contractors and subcontractors, or headquarters and agents. However, in the rights transfer structure, the entity excluding the cultivator (foreign headquarters) is located overseas, while the large corporation that takes over the rights and profits is legally considered a 'third party.'

Previous cultivating companies have responded through injunctions against unfair competition or lawsuits filed with the Korea Fair Trade Commission, but proving 'misappropriation of results' or 'abuse of market position' presents significant legal barriers in practice. The core issue is that while contributions to market development are acknowledged, there is no institutionalized system for compensation.

Frontline Workers Face Employment Continuity Gaps

When rights are transferred, frontline workers face the most immediate crisis. Under the Labor Standards Act, the obligation for employment succession arises only in cases of 'business transfer.' However, since rights transfers take the form of 'termination followed by a new contract' rather than asset and organizational handover, there is no legal obligation for the new distributor to inherit existing personnel.

The Joie Works Emergency Committee stated, "Due to controversies over contract termination and rights transfer, the livelihoods of approximately 140 employees, shareholders, and partner companies are under direct threat." They urgently called for legal measures to prevent a structure where the cost of cultivation leads to mass unemployment.

Securing rights by large corporations does not necessarily guarantee business success. Shinsegae International acquired the Salomon distribution rights in 2013 but withdrew in 2015 after suffering massive losses. In contrast, the brand later partnered with a specialized operator (GBGH), resulting in sales increasing from 35.6 billion won to 67.2 billion won—an 88.8% rise—and operating profit jumping approximately fourfold to 11.5 billion won.

Joie Works expressed concern that the repetition of this unfair paradigm creates a learning effect for global headquarters, ultimately weakening negotiation power across Korea's entire distribution market.

Joie Works Emergency Committee Plans to Actively Inform Government of Institutional Blind Spots

Joie Works announced that it secured the HOKA license in 2018, growing its sales from 22.8 billion won in 2022 to 82 billion won in 2024. However, Joie Works also clearly explained that this HOKA case differs in some aspects from previous cases involving other companies.

The U.S. headquarters of Decathlon cited not a commercial refusal to renew the contract but the application of ethical standards following allegations of assault and abuse by Cho Seong-hwan Jeon (CEO) as grounds for contract termination. Jo Jeon (CEO) admitted to the assault incident itself and apologized, but the core frame of 'subcontractor abuse' initially reported in media was officially corrected to 'conflict with a competitor' through mediation by the Korea Media Arbitration Committee.

Furthermore, according to Joie Works, the main trial has not yet concluded, and both Decathlon U.S. and E-Land's announcements fail to specify key details such as deadlines.

In particular, Joie Works employees voiced strong concerns that when large corporation E-Land faced uncertainty over renewing contracts for its flagship brands like New Balance and the risk of losing rights, it recklessly targeted HOKA's rights—a brand painstakingly cultivated by another company—to fill the gap, thereby exacerbating market chaos.

The Joie Works Emergency Committee plans to actively inform the government and policy authorities about the institutional blind spots in the 'cultivation-retrieval' structure through this rights controversy and strongly urge the establishment of measures to protect the intangible assets painstakingly built by SMEs (small and medium-sized enterprises) and the livelihood rights of workers.

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*This content was translated by AI.