Park Jae-hyuk is a seasoned journalist who has provided comprehensive coverage of South Korea's corporate dynamics, economic policies, industry challenges and the global positioning of Korean companies. Based on the articles he has written since joining The Korea Times in 2016, his investigative approach has helped readers understand corporate governance, economic trends and business strategies shaping South Korea’s economy.
Gong Cha Korea to purchase its parent company in Taiwan
An inside view of Gong Cha at Hyundai Department Store Mokdong in southwestern Seoul. / Courtesy of Gong Cha Korea
By Park Jae-hyuk
By Park Jae-hyuk
Gong Cha Korea will raise its share in its parent company, Royal Tea Taiwan (RTT), up to 70 percent by January next year, the bubble tea-specialized franchise said Wednesday.
Gong Cha Korea signed a memorandum of understanding (MOU) with RTT shareholders in April to acquire the majority of shares of the parent company. The Korean branch currently has management rights of the Taiwan-based company, because it has owned a 35 percent stake since July.
Gong Cha Korea said it will buy an additional 35 percent by January, while RTT shareholders will continue to hold the remaining 30 percent.
Started in Taiwan in 2006, the bubble tea brand came here in 2012, after gaining huge popularity with Taiwanese consumers.
Former CEO Kim Yeo-jin and her husband established the first Korean franchise near Hongik University, western Seoul, at the time through a master franchise contract with RTT.
In 2014, the brand was acquired by the Japanese-based private equity fund, Unison Capital.
The number of Gong Cha stores in Korea is over 360 and their total sales in 2015 had grown 11 percent year-on-year. The sales of the Korean branch in 2015 tallied more than 59 billion won ($52 million) and its profit was 8 billion won.
After the acquisition, Gong Cha Korea will acquire over 1,380 stores in 18 countries worldwide. The brand has stores in the U.S., Canada, Australia, New Zealand, China, Japan, Singapore, the Philippines and Hong Kong among others.
The company plans to open stores in the Middle East and in Europe where the brand has not been established yet. It also plans to use more Korean ingredients instead of Taiwanese ingredients and provide them to the franchises worldwide.
Before Gong Cha Korea’s acquisition of its parent company, other Korean branches of food and beverage brands had also purchased their parent companies. Mister Pizza acquired its Japan-based parent company in 2010 and Smoothie King acquired its U.S.-based parent company in 2012.