Can be sent: Korea's big-name Chinese abandoned the value of the surviving in China

Shenzhen can be sent

Since 2010, a wave of major brand breakups has been met with a counterattack from the original operators.

Zhao Yunhu, a clothing dealer with over a decade of experience, initially focused on quantity. In the past seven years, he played a key role in helping a certain brand achieve market leadership and successfully operated a South Korean low-end brand in China. This helped him establish a unique channel "value-added" strategy.

However, Laojianghu now faces new problems. After Zhao Yunhu successfully added value to the Korean brand Kang Jin Young, both SKN (the brand manager) and Zhao Yunhu (the channel developer) were about to fight for control of the brand in China. A fierce battle over brand rights between Chinese and South Korean companies began.

It seems like an unequal battle. On one side is SKN, a subsidiary of South Korea’s top 500 company SK Group, which has invested heavily in China’s third-largest conglomerate, SK. On the other side is Zhao Yunhu’s Shenzhen-based company, with assets just over 100 million yuan.

Confrontation

On June 30, 2010, SKN unilaterally terminated the contract and stopped all product deliveries. Their statement was bold: the original agency contract for Kang Jin Young was valid for five years until June 2010. It could have been extended for three more years if there was no major breach. However, SKN claimed that only 15 stores were opened within five years, far below the contractual target of 50. Sales also fell short, reaching only one-fifth to one-third of the target each year. As a result, SKN refused to extend the contract for the next three years, calling it a “normal business move.”

Zhao Yunhu was furious. “Falling short of targets is normal! The average sales per store we run far exceed the contract requirements. Some even surpass 100%!” he said. “But you asked me to open 50 stores, yet only allowed 17 (two of which were closed due to mall shutdowns). Then you told me to reach the sales target of 50 stores using just 15? That doesn’t make sense at all!”

Expanding stores should benefit both sides, so why did SKN refuse to take advantage of this opportunity?

Five years earlier, on July 1, 2005, Zhao Yunhu signed an agency agreement with OBZEE, the owner of the Kang Jin Young brand. At the time, Zhao Yunhu proposed opening 50 stores in five years, believing it was entirely feasible. “We had the capability to meet or even exceed that number,” he said.

Zhao Yunhu was confident, and OBZEE gave him some flexibility. He wanted a 15-year contract, but OBZEE strongly opposed it. Eventually, the term was reduced to eight years — the current “5+3” structure.

Looking back, Zhao Yunhu recalled that OBZEE, before being acquired by the SK Group, wasn’t as powerful as SKN. They faced strong competition in South Korea and needed to find opportunities in the Chinese market. That’s why they were eager to partner with Zhao Yunhu and negotiated sincerely.

This sincerity was reflected in the contract. OBZEE placed no restrictions on store locations or sizes, only requiring that the brand owner confirm the store.

No one could have predicted that this seemingly reasonable clause would later become the root cause of the dispute between SKN and the channel distributors who had acquired the Kang Jin Young brand from OBZEE.