Shinsegae Group Executive Vice President of Management Jeon Sang-jin speaks about the findings of the group’s internal investigation into Starbucks Korea’s recent marketing controversy at Josun Palace in Seoul’s Gangnam District, Tuesday. Korea Times photo by Shim Hyun-chul
A lack of sensitivity toward one of the country’s defining pro-democracy movements, along with a broken approval chain that failed to screen for potential issues, were identified as the main causes behind Starbucks Korea’s recent marketing fiasco, which critics said inappropriately referenced Korea’s democratization movement of the 1980s.
Four executives of Shinsegae Group, whose affiliate Emart is the largest shareholder of the coffee chain operator, on Tuesday disclosed the findings of a weeklong internal investigation into Starbucks Korea following the launch of the controversial “Tank Day” promotion on May 18. They admitted there were “serious loopholes in the company’s system for marketing planning and risk management.”
Shinsegae Group said the “Tank Day” promotion, launched on the same date as the annual commemoration of the 1980 Gwangju Democratic Uprising, was conceived and submitted for approval by five employees in Starbucks Korea’s e-commerce division.
The investigation found that some of the employees lacked sufficient awareness of the country’s democratic history and, even after the promotion sparked a major backlash for appearing to evoke the military’s violent suppression of civilians, failed to recognize the seriousness of the issue or express remorse over the campaign.
“Some of the members failed to understand the gravity of the situation and repeatedly made inappropriate remarks during the investigation that clearly reflected their limited understanding of Korean history,” Jeon Sang-jin, executive vice president of management at Shinsegae Group, said during a press conference, where its Chairman Chung Yong-jin made an in-person apology over the fiasco.
“Three of them also refused to submit their smartphones to Shinsegae management, citing privacy concerns, which prevented us from determining whether there had been any intent to mock history in planning the promotion.”
Members of the May 18 Memorial Foundation and three organizations established under laws related to the Gwangju Democratic Uprising protest at May 18 Democratic Plaza in Gwangju, Tuesday, calling for the shutdown of Starbucks Korea over allegations that the company defamed the 1980 pro-democracy movement. Yonhap
“They all denied any such intention, saying they had simply used artificial intelligence and never associated the promotion with the Gwangju Democratic Uprising,” Jeon said. “However, if further police investigation uncovers any indication of deliberate intent, we will hold those responsible accountable regardless of their positions.”
Shinsegae Group acknowledged that although the promotion received final approval from Starbucks Korea CEO Sohn Jeong-hyun — who was dismissed by Chung on the day the campaign was launched — none of the seven executives and managers involved in the approval chain, including team leaders, managers, directors and Sohn himself, raised concerns about the plan.
Jeon said some decision-makers did not even open the attached files explaining the Tank Day campaign and approved the promotion without fully reviewing its details.
“They approved it out of habit, without knowing details. All they wanted was to speed up the marketing process and launch the promotion as quickly as possible. It even passed review by the company’s legal department,” he said.
“Even if the original organizer planned the event due to poor judgment or a mistake, we believe the situation could have been prevented if the company’s review and approval system had functioned properly.”
Shinsegae, however, said the e-commerce division plans promotional events almost every week and because of the frequency does not check every time whether the date of the event’s launch is linked to any socially sensitive events.
The group said it has shared details of Starbucks Korea’s marketing controversy and its aftermath with Starbucks headquarters in Seattle.
In the wake of the fiasco, Starbucks told The Korea Times that it viewed the controversy at Starbucks Korea as an “unacceptable marketing incident” and said stronger internal controls and review standards are being implemented following the backlash in Korea.
“Of course, the U.S. headquarters is viewing this matter with the utmost seriousness,” Jeon said.
“We plan to consult with headquarters on measures to improve overall internal risk management and control processes. We also understand that headquarters is expected to hold official discussions with us on these issues within the next few days.”
