'Buying Pocari Sweat helps support Yasukuni'

By Nam Hyun-woo

Dong-A Otsuka CEO Yang Dong-young

A controversy has been brewing over Dong-A Otsuka, the maker of sports drink Pocari Sweat and nutrition beverage Oronamin C, since its majority stakeholder in Japan gave political funding to lawmakers visiting the Yasukuni Shrine that houses the remains of Japanese war criminals.

Civic activists here say the beverage maker may not be responsible for its stakeholders’ behavior, but should be more active in notifying Korea’s stance to Japan.

According to Rep. In Jae-keun of the Democratic Party of Korea, Tuesday, Japan’s Otsuka Pharmaceutical has political donations to 14 lawmakers through an association of pharmaceutical industry and politics. Those lawmakers, including right-wing politicians Ichiro Aisawa and Fukushiro Nukaga, visited the Yasukuni Shrine, which houses the remains of the Class-A war criminals from World War II.

Visits by Japanese government officials often become a source of tension between Japan and neighboring countries Korea and China which view it as a symbol of Japan’s past imperialism.

And some of the funding was believed to be contributed by Dong-A Otsuka, according to In’s office, as the company has been sending dividends to Otsuka Pharmaceutical.

Dong-A Otsuka was formerly a part of Dong-A Pharmaceutical and in 1987 became a joint venture between Dong-A Pharmaceutical and Otsuka Pharmaceutical, with the latter possessing a 50 percent stake in Dong-A Otsuka.

And Dong-A Otsuka has been sending a significant amount of dividends to its stakeholders. In 2017, it paid 1.32 billion won ($1.16 million) in dividends with half of that going to Otsuka Pharmaceutical because it has a 50 percent stake.

The amount has been doubled from a year earlier, despite its operating profit backpedaling from 14.93 billion won in 2016 to 13.5 billion won last year.

Except for 2015, the country has been sending 660 million every year from 2013 to 2016 and half of that went into Otsuka Pharmaceutical. Also, Dong-A Otsuka is paying royalties to Otsuka Pharmaceutical for Pocari Sweat and Oronamin C drinks’ sales in Korea, because those products were developed by the latter, though Dong-A Otsuka is making and selling them here.

Dong-A Otsuka is relying heavily on the sales of Pocari Sweat, with revenue coming from the drink accounting for nearly 60 percent of the company’s sales.

Last year Dong-A Otsuka raked in 144 billion won in net sales of Pocari Sweat, with the product dominating the domestic ion supply drink market with a more than 50 percent share.

“Dong-A Otsuka was not aware of the support,” a company official said. “The support done by Otsuka Pharmaceutical could not be learned by its joint venture, Dong-A Otsuka.”

“It is understandable that the Korean venture cannot handle the support of its Japanese stakeholder,” said Seo Kyung-duk, a professor at Sungshin Women’s University.

“However, it is necessary for Dong-A Otsuka to notify Otsuka Pharmaceutical of Korea’s stance over supporting those lawmakers so they can understand the situation properly.”