The Korea Herald

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Lotte Mart denies transfer of headquarters to China

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Published : Aug. 8, 2011 - 18:47

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Lotte Mart struggled Monday to quell market speculation that the nation’s second-largest retail chain is considering moving its headquarters to China in the near future.

According to news reports, Lotte Mart CEO Noh Byung-yong hinted at a potential move to China in a recent meeting with company officials.

“When our overseas sales exceed domestic sales, we could move the head office to China,” Noh was quoted as saying by a local news agency.

“The domestic retail market is nearing saturation and related regulations are getting tougher. Going global is the only way for us to become Asia’s No. 1 retail chain,” he said. 
Lotte Mart in Tianjin, China. (Yonhap News) Lotte Mart in Tianjin, China. (Yonhap News)

Despite the news reports, which contained specific plans such as the integration of Lotte Mart’s Chinese operations early next year, the company firmly denied the speculation.

“The CEO may have intended to emphasize the growing importance of the global market,” a Lotte Mart official told The Korea Herald, adding that the company’s public relations team had yet to confirm the comment.

“It’s been just five years since we started overseas business. We have too many variables in the global market to set such a long-term, specific plan for now,” the official said.

Lotte Mart has 107 overseas outlets ― 82 in China, 23 in Indonesia and two in Vietnam. In Korea, the company operates 92 stores.

The company’s recent efforts for global expansion, however, have been disappointing, with overseas sales last year standing at 2.6 trillion won ($2.4 billion), less than half of its domestic sales of 5.9 trillion won.

Noh’s rare comment ― unprecedented by a major Korean company ― drew keen attention Monday as it came after E-Mart, the nation’s largest discount chain and Lotte’s local rival, announced in June it would sell off part of its Chinese business due to its recent lackluster performance.

Lotte, the local No. 2, is doing better than E-Mart when it comes to China. Last year, E-Mart, which entered China in 1997, almost a decade earlier than Lotte Mart, logged 620 billion won in sales in its 27 stores across China.

Data from Chinese market research firm Linkshop also said E-Mart ranked 76th out of 100 retailers in China, while Lotte Mart stood at 43rd in terms of total revenues.

Lotte Mart said company’s strategy of diversifying and localizing its outlets centered in small cities may have been the reason, while E-Mart has long targeted major cities.

The Lotte Mart official said that the company will strengthen its Chinese dominance through active takeover deals with local companies there along with opening its own outlets.

By Lee Ji-yoon (jylee@heraldcorp.com)