Lotte Group, South Korea’s retail giant, marked its 50th anniversary Monday with the announcement of a new vision and the lavish opening of Lotte World Tower, amid lingering concerns over its future growth and legal troubles for its leader Shin Dong-bin.
Chairman Shin Dong-bin speaks at a ceremoy celebrating Lotte Group's 50th anniversary Monday. (Lotte Group)
“Today as we welcome our 50th anniversary, we are at a turning point for new growth,” Chairman Shin told Lotte employees at an internal event Monday. “We must use our imagination and flexible thinking to prepare for a rapidly changing society.”
That “flexible thinking” was introduced as a new vision for the group at a press conference at Lotte Hotel on Monday.
“After deep introspection, we have come to realize that the goal of our company is not just in revenue growth and increased profits,” said Hwang Gak-kyu, Lotte Group president and the head of Lotte’s corporate innovation office.
The new strategy is designed to make Lotte a “Lifetime Value Creator” that provides goods and services for consumers through all stages of life, according to the company.
The strategy replaces the group’s previous 2018 vision, announced in 2009, of becoming one of the top 10 companies in Asia through a focus on continued growth to reach annual sales of 200 trillion won ($179.2 billion).
Under this revenue-focused direction, Lotte’s revenue grew from 42 trillion won in 2008 to 92 trillion won in 2016.
In addition to its emphasis on consumer satisfaction over quantitative growth, the strategy calls for more commitment to community contributions and win-win growth with smaller companies that have contracts with Lotte.
The shift is part of Lotte’s efforts to improve its image among retail consumers. Retail constitutes over 40 percent of Lotte Group‘s total businesses. Lotte’s corporate image has faced heat amid public infighting among the group’s leading Shin family, which brought the company’s close connections to Japan into the spotlight, and allegations of corruption.
Fireworks at the Lotte World Tower Sunday to celebrate its grand opening (Lotte Corp.)
That image shift is also helped along by the grand opening of the luxurious 555-meter Lotte World Tower in southeast Seoul, the culmination of a 30-year project to create a new landmark for the city. On Sunday, the tower hosted a fireworks festival that the company described as representing “harmony” among the community.
However, the future is not all rosy for the group.
In recent years the retail giant has been hit with a series of difficulties both in sales and image, from a family squabble over managerial control of the group to the ongoing prosecution of Chairman Shin Dong-bin and his family over allegations of embezzlement.
The hardest blow came from the intergovernmental spat between Korea and China over the installment of an American anti-missile defense system here. Lotte, which provided the land swap deal for the THAAD system, was hit with a wave of repercussions from Beijing and Chinese consumers including widespread closures of its retail outlets in China and a travel ban that slashed sales from Chinese tourists at its duty-free shops here.
On Monday, the liberal Democratic Party renewed calls for a parliamentary inspection of the land swap deal, raising questions about whether Lotte was pressured by the government to agree to the deal.
The impact has also put the stock market listing of Hotel Lotte on hold, continuing a delay from last year.
“As you know, the THAAD issue has had a significant effect on one of our main businesses, duty-free,” Hwang said. “The Hotel Lotte IPO will only be possible once our duty-free business regains its footing. But our basic stance is that we will pursue the IPO as soon as possible.”
It is still unclear when that will be, as China continues to pressure Lotte’s business interests in retaliation against Korea’s THAAD agreement. Hwang denied rumors that Lotte was preparing to pull its businesses out of China in the face of falling profits, saying that Lotte’s presence in China was still in its “investment stages.”
However, he also admitted that there was “not much that (Lotte) could do” regarding the situation in China, beyond carefully monitoring the circumstances.
By Won Ho-jung (firstname.lastname@example.org)