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| Lotte Holdings' corporate logo / Korea times file |
By Kim Jae-heun
Lotte GRS said its food and retail business in Vietnam is facing problems due to a halt in facility construction and delays in the import of equipment due to the COVID-19 pandemic.
"It is true that Lotte GRS is leaving the Indonesian market but we are continuing with our franchise and food retail businesses in Vietnam," a Lotte GRS official said.
Lotte GRS has established Lotte F&G Vietnam together with Lotte Foods last year. The retail company's second overseas corporation in Vietnam is an affiliate of Lotte GRS, whose mother company is Lotte Holdings based in Seoul.
Lotte GRS's 2020 financial statements showed it did not trade anything with Lotteria Vietnam. Lotte GRS said this was is because the company belongs to Lotte Holdings and its overseas sales cannot be recorded as its own.
Lotteria Vietnam's book value reached 26.8 billion won as of early last year and it declined to 15.6 billion after showing 11.2 billion won of valuation loss. Its net loss surpassed 10 billion won in one year.
Lotte had a plan to expand its food material business in the Southeast Asian countries like Myanmar, Laos and Cambodia through Vietnam. However, due to the outbreak of COVID-19, the borders closed down and it led to the suspension of Lotte GRS's global business plan.
Despite the spread of the coronavirus, Lotte GRS invested 15.5 billion won to set up a food product company in Vietnam.
Considering that many food companies are downsizing their overseas business due to the pandemic, Lotte GRS is showing a strong intention to beef up its retail business in the Southeast Asian countries. Lotte GRS has been investing in Vietnam with an expectation to expand business in the region since 1990.
Meanwhile, Lotte Holdings was established in 2017 and a number of food subsidiaries were transferred to the company so it could take advantage of tax benefits. Food companies take ownership of overseas corporations by acquiring their stocks. The subsidiaries handed over their overseas affiliates to Lotte Holdings temporarily and will take back them when the legal requirement is met.
"We can transfer back overseas corporations to Lotte GRS from Lotte Holdings this year. However, the business there is not doing well and so transfer could be delayed," a Lotte Group official said.
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