Lotte’s Commitment
Shin Dong-bin, chairman of the Lotte Group announced the birth of a “new Lotte Group” via a major restructuring plan on October 25. “We will continue to work under our business philosophy of “promoting the national economy via business activities set 50 years ago,” chairman Shin said in an event to apologize to people on the day.
According to the revamping plan unveiled on the day, the group said that they will change their business paradigm from “quantitative growth” to “qualitative growth.” The Lotte Group has managed its affiliates in accordance with its business strategy titled “Vision 2020” to grow into one of the ten largest business groups in Asia by posting 200 trillion won in sales by 2020. But the Lotte Group has judged that such a high-growth strategy will spark off many negative side effects, too. “Lotte’s new goal is not simple quantitative growth but shared growth in a business ecosystem,” they said.
As the SK Group came up with a new business slogan of “Happiness-Oriented Management” after the prosecution’s investigation into its chairman Chey Tae-won, the Lotte Group is expected to suggest new business goals such as “value management.” Most of all, the group decided to scale up its investment and employment. Accordingly, the group will raise its investment volume to 40 trillion won for the next five years from current six to seven trillion won a year.
This equals an annual increase of one to two trillion won in its investment. “We are planning to converge our investment on M&As, facility investment and R&D,” said Lee Jong-hyun, an executive director at the Lotte Group’s Business Policy Headquarters in the press conference held on the day.
With regard to listing Hotel Lotte on the stock market, they decided to find a fast track to move up the schedule as much as possible. Hotel Lotte is perched at the top of the Korean Lotte Group’s corporate governance structure. The Lotte Group will be able to loosen the link between the Korean Lotte Group and the Japanese Lotte Group if and when Hotel Lotte is listed on the Korean stock market. Chairman Shin is fully aware of the fact that Hotel Lotte’s IPO holds the key to a total makeover of the group.
But it is still unclear whether or not the Lotte Group will be able to list the hotel earlier. This is because chairman Shin who is also the CEO of Hotel Lotte will stand trial on charges of embezzlement among others. The Korea Exchange stipulates that if the CEO of a company commits accounting crimes such as embezzlement, the company will not be allowed to have its IPO. Lotte Group will persuade financial authorities, highlighting the point that the listing of Hotel Lotte will have a big positive impact on the Korean economy.
On the other hand, the Lotte Group disclosed a plan to make transparent its highly performing affiliates such as Lotte Data Communication, Korea Seven and Lotteria one by one by listing them on the stock market apart from Hotel Lotte.