The bidding war to win two licenses to operate downtown duty-free stores has entered a new phase as applicants competitively target points in corporate social responsibility categories to vie for the upper hand, according to sources Thursday.

Hyundai Department Store, one of the seven applicants to join the bidding for the burgeoning duty-free market worth 3.2 trillion won ($2.9 billion), said it would return 20 percent of its envisioned store’s operating profits to society if it wins the license.

“We have concluded that social restoration is an important qualification for the duty-free business as the license is offered by the country,” a company official said.

Given that listed companies’ donations account for an average of 1 percent of their profits, the group’s pledge trumps the average 20-fold.

The competition to promote CSR activities falls in line with the upcoming announcement of the Korea Customs Service, which manages the bidding, for the two winners next month after assessing the applicants on a 1,000-point scale.

“If there’s not much difference among applicants’ strategies and blueprints for the duty-free business, the CSR activities can be a crucial criterion to decide the winner,” an industry source said.

According to the customs office, applicants’ social responsibility investment accounts for 15 percent of the points on their evaluation.

“The assessment on the firms’ CSR will focus on their qualities such as the envisioned store’s contribution to the tourism sector, its social impact and the capacity to support small and medium enterprises,” an official at the customs office said.

Apparel firm E-land also said it will donate 10 percent of its duty-free store’s net profit, or some 49 billion won for five years. The customs office offers the firms the right to operate a duty-free shop in Seoul for five years.

Lotte Duty Free, which already operates three of the six duty-free stores in Seoul, said it will sponsor 200 Indonesian children for three years and donate 30 million won to support special education projects on Jejudo Island.

A joint venture between Hotel Shilla, Hyundai Development Company Shilla and Shinsegae plans to focus on reinvigorating the local economy.

HDC Shilla CEO Yang Chang-hoon said the company would promote the Yongsan area to foreign tourists, where it unveiled plans to develop what it calls the world’s biggest downtown duty-free complex, and create synergy through various marketing campaigns such as tourism packages for nearby areas.

Seven firms ― Lotte Duty Free, HDC Shilla, SK Networks, E-Land, Hanwha, Shinsegae Group and Hyundai Department Store ― joined the bid, which closed Monday.

By Park Han-na  (hnpark@heraldcorp.com)