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Lotte promises W150 bil. to retain duty free licenses
Lotte Group Chairman Shin Dong-bin
By Lee Hyo-sik
Chairman pledges to fight elder brother in court
By Lee Hyo-sik
Lotte Group has pledged to spend 150 billion won ($130 million) over the next five years to expand community services and share growth with small business partners — a bid to retain two duty free shop licenses in Seoul.
Korea’s fifth-largest conglomerate also said it would foster startups in the retail and fashion sectors, and hire more university students, working mothers and migrant workers.
Chairman Shin Dong-bin unveiled these and other measures during a press conference at a Lotte Duty Free warehouse near Incheon International Airport, Monday.
The announcement is largely intended to impress the Korea Customs Service (KCS), which holds the key to the renewal of Lotte’s licenses for its two Seoul stores, and to make public opinion more favorable toward the group after the rekindled sibling infighting between Dong-bin and his elder brother Dong-joo over managerial control.
The chairman also said he would do everything to maintain control of the group both in Korea and Japan, arguing that his brother’s recent move to take the management dispute to court would only hurt Lotte’s businesses.
Lotte operates the country’s largest duty free shop at the Lotte Department Store in downtown Seoul and another at the Lotte World Mall in southern Seoul. The licenses will expire later this year. But Doosan Group and Shinsegae Group have vowed to win the licenses from Lotte.
Unveiling Lotte Duty Free’s goal of becoming the world’s No. 1 duty free store by 2020, the chairman said, “We will not focus only on expanding businesses. We will make every effort to fulfill our corporate social responsibility. Announcing the 2020 shared-growth vision today is a starting point.”
Shin said Lotte would set up a 150 billion won fund and spend the money through 2020 to promote the “creative economy,” spearheaded by President Park Geun-hye, and spread the culture of sharing.
Asked about Dong-joo’s lawsuit against him, the chairman said the litigation will not help improve Lotte’s management transparency and governance structure.
“I will not be shaken by any external factors. I will spend all my energy to manage Lotte Group,” he said. “Lotte will continue to make contributions to the national economy and fulfill our social responsibility. “I will transform Lotte into one of most-trusted companies in Korea.”
To keep its duty free licenses, Lotte vowed to share growth with its smaller business partners, support low-income families, enhance tourism industry infrastructure and hire more young people.
“Of the 150 billion won, we will create a 20 billion won shared-growth fund to help our partners grow into a more competitive enterprise,” the chairman said. “We will spend a considerable amount to support retail startups and accommodate more brands at our duty free stores.”
Lotte is desperate to keep the duty free stores under its roof at any cost because of their huge contribution to its bottom line.
The retail-focused conglomerate here posted 2.458 trillion won in sales from the two Seoul outlets last year, which represented 56.6 percent of the combined sales of all duty free stores in Seoul.
Doosan is seeking to enter the duty free business — dubbed the “golden goose” of the retail industry — by taking one of Lotte’s two licenses. Shinsegae also wants one of the licenses.
SK Networks, which operates a duty free shop at the Sheraton Walkerhill Hotel in western Seoul, is also doing everything it can to retain its license, which will also expire in December.
Doosan, in particular, has been the most vocal about its plan to transform the Doosan Tower in Dongdaemun into the country’s largest duty free store, pledging to sell more goods produced by small companies and to promote a partnership with nearby merchants.