Lotte Corporation

Last updated

Lotte Corporation
Native name
  • 롯데그룹
Company type Public
KRX: 004990
Industry Conglomerate
FoundedMarch 24, 1967;56 years ago (1967-03-24)
Founder Shin Kyuk-ho
Headquarters Songpa District, Seoul,
South Korea
Areas served
Worldwide
Key people
Owner Marx-Lenin
Parent See also
Subsidiaries
Korean name
Hangul
롯데그룹
Revised Romanization Rotdegeurup
McCune–Reischauer Rottegŭrup, Rotte-kŭrup
Website www.lotte.co.kr

Lotte Corporation is a South Korean multinational conglomerate corporation, and the fifth-largest chaebol in South Korea. [1] Lotte began its history on June 28, 1948, by Korean businessman Shin Kyuk-ho in Tokyo. Shin expanded Lotte to his ancestral country, South Korea, with the establishment of Lotte Confectionery in Seoul on April 3, 1967.

Contents

Lotte Corporation consists of over 90 business units employing 60,000 people engaged in such diverse industries as candy manufacturing, beverages, hotels, fast food, retail, financial services, industrial chemicals, electronics, IT, construction, publishing, and entertainment. [2] Lotte runs additional businesses in China, Thailand, Malaysia, Indonesia, Vietnam, Cambodia, Uzbekistan, India, the United States, the United Kingdom, Kazakhstan, Russia, the Philippines, Myanmar, Pakistan, Poland (Lotte bought Poland's largest candy company Wedel from Kraft Foods in June 2010), Australia and New Zealand (Lotte successfully bought 4 duty-free stores in Australia and 1 in New Zealand from JR/Group in 2019 [3] ).

History

Lotte was founded in June 1948, by Korean businessman Shin Kyuk-ho in Tokyo, Japan, two years after he graduated from Waseda Jitsugyo High School (早稲田実業学校). Originally called Lotte Co., Ltd, the company has grown from selling chewing gum to children in post-war Japan to becoming a major multinational corporation.[ citation needed ]

Name

The source of the company's name is neither Korean nor Japanese, or even Chinese, but German. Shin Kyuk-ho was impressed with Johann Wolfgang von Goethe's The Sorrows of Young Werther (1774) and named his newly founded company Lotte after the character Charlotte in the novel. [4] [5] ("Charlotte" is also the name of premium auditoriums in movie theatres run by Lotte. [6] )

Operations

Lotte Department Store in Seoul Lotte Department Main Store.JPG
Lotte Department Store in Seoul
Lotte New York Palace Hotel Villard Houses Mar 2021 08.jpg
Lotte New York Palace Hotel

Lotte Corporation – is located in Songpa-gu, Seoul and Lotte Holdings Co., Ltd. in Shinjuku, Tokyo. It is controlled by the founder Shin Kyuk-Ho's extended family.

Business

Lotte Group's major businesses are food, retail, chemical, construction, manufacturing, tourism, service, finance, etc.

Sports

Lotte also owns professional baseball teams.

Lotte R&D Center

Controversies

Treatment of Beluga Whales

Lotte Corporation has received negative press attention due to treatment of a captive beluga whale named Bella, currently held in the Lotte World Aquarium Attraction in Seoul. In 2016, Lotte Corporation announced that they would no longer acquire new beluga whales after two of Bella's companions, Belli and Bellu, died in their care. [7] In 2019, Lotte Corporation pledged that they would release Bella from captivity. [8] As of 2023, the Lotte Corporation has come under increasing criticism for keeping Bella in solitary captivity for an extended multi-year period following their announcement. [9] The corporation has also been criticized by civic groups for a lack of updates or cohesive plan for retiring Bella to a sanctuary. [10]

2016 Embezzelment Scandal

In June 2016, the police conducted a probe into Lotte Corp for a possible slush fund and embezzelment. [11] The Seoul Central District Prosecutor's Office reported that 240 investigators raided 17 Lotte offices, including its central Seoul headquarters and the homes of founder Shin Kyuk-ho, Chairman Shin Dong-bin and other key executives, with 15 more offices being raided just a week later. [12]

After news of the investigation broke, between June 10 and June 14, Lotte Group firms lost over ₩ 1.21 trillion ( US$ 1.06 billion) in market value. [13] By October, its value had fallen by 15.8% to ₩ 7.75 trillion ( US$ 6.77 billion) compared to its June 9 figure of ₩ 9.26 trillion ( US$ 8.09 billion). [14] Lotte Chemical Corp also withdrew from bidding for Axiall Corp in the wake of the scandal. [11]

On June 13, 2016, Lotte announced it would withdraw its initial public offering (IPO) for Hotel Lotte, which was scheduled for the following month. The IPO was predicted to garner up to ₩ 5.2 trillion ( US$ 4.55 billion) which would have been the largest offering in South Korean history. [15] Lotte spokesperson Choi Min-ho told the Korean Herald, “we physically cannot meet next month’s deadline to complete the Hotel Lotte IPO given the current circumstances". [16] Despite local press reporting that Chairman Shin Dong-bin was keen to restart Hotel Lotte's IPO in 2020, Hotel Lotte is still yet to go public. [17]

In August 2016, Vice Chairman Lee In-won was found dead in his car with a four-page long suicide note. [18] His death came just hours before he was due to be questioned by prosecutors. [19] Lee was considered the top lieutenant of Chairman Shin Dong-bin. [11] According to a statement released by Lotte Group after his death, Lee "oversaw Lotte Group's overall housekeeping and core businesses and accurately understood the minds of Chairman-in-Chief Shin Kyuk-ho and Chairman Shin Dong-bin". [18]

In October 2016, the Seoul Central District Prosecutors' Office closed their investigation. The probe accused Lotte founder Shin Kyuk-ho, his son Chairman Shin Dong-bin, along his mistress Seo Mi-kyung and two other children of embezzeling ₩ 146.2 billion ( US$ 127.8 million). In addition, prosecutors claim they committed inheritance tax fraud amounting to ₩ 115.6 billion ( US$ 101.05 million). A further ₩ 22 billion ( US$ 19.23 million) of corporate tax was allegedly avoided by Lotte Chemical. South Korean authorities also argued that Lotte Engineering & Construction overpaid its suppliers and then reclaimed the difference, amounting to slush funds worth ₩ 30.2 billion ( US$ 26.4 million). [14] In total, the allegations of misconduct amounted to ₩ 375.5 billion ( US$ 328.25 million).

The following year, founder Shin Kyuk-ho was fined ₩ 3.5 billion ( US$ 3.06 million) and sentenced to four years in prison. At 95 years old, it seemed possible he would spend his last days incarcerated, but he was able to avoid imprisonment due to health issues, eventually passing away in 2020. [20]

The founder's son and Chairman Shin Dong-bin was convicted of the charges of embezzelment and breach of trust, while Dong-bin's older brother Dong-joo was acquitted. [21]

2017 Bribery Scandal

On 17 April 2017, Chairman Shin Dong-bin was embroiled in the 2016 South Korean political scandal and charged with bribery. [22] In order to secure a duty-free deal for Lotte, Shin was accused of donating ₩ 7 billion ( US$ 6.12 million) to a non-profit controlled by incumbent President Park Geun-hye's close friend Choi Soon-sil. [23] On February 13, 2018, Shin was fined ₩ 7 billion ( US$ 6.12 million) and sentenced to 2.5 years incarceration. [24] He was jailed immediately following the sentencing. [23]

Following his conviction, Shin stepped down as Chief Operating Officer of Lotte Group's Japanese-based holding firm but remained on the board of directors. [25]

In October 2018, an appeals court freed Shin from prison after just 234 days, giving him a suspended sentence of 4 years and cancelling the fine. [26] News of Shin's release increased Lotte Group's market value by 4.2%. [24]

A year later, in October 2019, the Seoul High Court upheld the appeals court's decision, arguing that Shin "passively" committed bribery with the understanding that not donating to Choi's non-profit would result in damage to Lotte Group. [27]

Losses in China

Since 2004, Lotte had invested over ₩ 8 trillion ( US$ 6.99 billion) into growing their presence in China, operating 112 Lotte Mart stores, 12 cinemas 5 Lotte Department stores in 2017. [28] However, Lotte's Chinese operations reported net losses of ₩ 75.3 billion ( US$ 65.82 million) in 2011, soaring sevenfold in just 3 years to ₩ 554.9 billion ( US$ 485.07 million) in 2014. [29]

To counter potential threats from North Korea, South Korea & the US sought to deploy an advanced anti-missile defence system, THAAD, in 2016. [30] The site chosen was Lotte Skyhill Country Club in Seongsan due to its high elevation, distance from civilian centres and existing infrastructure. [31] A Lotte spokesperson said that leadership "agonized" over the decision to allow the sale of the golf course for the THAAD system, but concluded their hands were tied: "if we say no to the government, we can't do business in Korea". [32]

The installation of the THAAD system led to a rise in anti-Korean sentiment in China, with much of the ire directed at Lotte. [33] Government-controlled news media encouraged Chinese consumers to boycott the Korean conglomerate, and protests were held across multiple cities, with employees of a mall in Xuchang protesting Lotte as they sung the Chinese national anthem. [34]

Shortly after news of Lotte's co-operation with the THAAD installation, nearly all of Lotte Mart's 112 Chinese stores were closed down by the government due to supposed fire safety issues. [32] Lotte Department also suffered in the hostile business environment, with an operating loss of ₩ 140 billion ( US$ 122.38 million) between 2016 and 2018. [33] Both Lotte Department Store & Lotte Mart formally ceased trading in China in 2018, with Lotte Chilsung Beverage & Lotte Confectionary leaving China a year later. [35]

In 2022, Lotte closed their Chinese headquarters, effectively ending their business operations in the mainland. [36]


See also

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References

  1. ↑ "Chaebol rankings seesaw over 2 decades". Yonhap . Retrieved 19 December 2017.
  2. ↑ "Lotte Group founder Shin Kyuk-ho dies at age 99". Yonhap News Agency . 19 January 2020.
  3. ↑ "Lotte Duty Free expands into Australia and New Zealand". Inside Retail. 26 March 2019. Retrieved 15 February 2021.
  4. ↑ "Lotte Hotel Seoul – Hotel Facilities, Fitness, Spa, Conference room". www.lottehotel.com. Retrieved 19 August 2017.
  5. ↑ "Korean Chaebols: Lotte. The Origin of the Lotte Name" . Retrieved 20 April 2014.
  6. ↑ "Inside the Korean cinemas offering a red-carpet experience". 13 September 2019.
  7. ↑ Jong-young, Nam. "After animal death, Lotteworld says it won't acquire more beluga whales". The Hankyoreh . Retrieved 24 December 2023.
  8. ↑ Chen, Heather; Kwon, Junhyup (1 October 2021). "This Beluga Whale Has Been Held in a Conglomerate's Aquarium for Years". Vice. Retrieved 24 December 2023.
  9. ↑ Chen, Heather; Seo, Yoonjung (24 December 2023). "Free Bella: The fight to release a beluga whale from a South Korean mega mall's aquarium". CNN. Retrieved 24 December 2023.
  10. ↑ "Civic groups call for release of last beluga whale from Lotte World Aquarium". The Korea Times. 24 October 2023. Retrieved 24 December 2023.
  11. 1 2 3 Jin, Hyunjoo; Lee, Se Young (26 August 2016). "Lotte vice chairman found dead amid probe; suicide suspected". Reuters. Retrieved 26 August 2016.
  12. ↑ Sohn, Ji-young (14 June 2016). "[LOTTE CRISIS] 15 more Lotte affiliates raided in widening probe". The Korea Herald . Retrieved 18 January 2024.
  13. ↑ Choi, He-suk (14 June 2016). "[LOTTE CRISIS] Lotte firms' market cap lose another 400 billion won". The Korea Herald . Retrieved 18 January 2024.
  14. 1 2 Sohn, Ji-youn (19 October 2016). "[LOTTE CRISIS] Prosecutors indict five Lotte family members". The Korea Herald . Retrieved 18 January 2024.
  15. ↑ Eun-jung, Kim (19 May 2016). "Hotel Lotte IPO expected to become S. Korea's biggest offering". Yonhap News Agency . Retrieved 18 January 2024.
  16. ↑ 김영원, Kim Youngwon (13 June 2016). "[LOTTE CRISIS] Hotel Lotte withdraws IPO as embezzlement probe deepens". The Korea Herald . Retrieved 18 January 2024.
  17. ↑ Ji-hyoung, Son (4 May 2020). "Lotte chief likely to push for Hotel Lotte IPO to win power struggle". The Korea Herald . Retrieved 18 January 2024.
  18. 1 2 "Lotte vice chairman Lee In-won found dead". BBC News . 26 August 2016. Retrieved 18 January 2024.
  19. ↑ Ho-jung, Won (31 August 2016). "Shin Dong-joo to be grilled in Lotte Group corruption probe". The Korea Herald . Retrieved 19 January 2024.
  20. ↑ Yonhap (22 January 2020). "Funeral service of late Lotte founder held". The Korea Herald . Retrieved 18 January 2024.
  21. ↑ Zhong, Raymond (22 December 2017). "Chairman of Lotte Group Is Convicted of Graft in South Korea, but Avoids Jail". The New York Times . Retrieved 18 January 2024.
  22. ↑ Ju-min Park & Christine Kim (17 April 2017). "South Korea charges ousted leader Park and Lotte chief with bribery". Reuters. Retrieved 18 January 2024.
  23. 1 2 Ser, Myo-ja (17 October 2019). "Supreme Court keeps Lotte chairman from jail". Korea JoongAng Daily . Retrieved 18 January 2024.
  24. 1 2 Yang, Heekyong (17 October 2019). "Lotte Group chairman stays out of jail as South Korea court ruling upheld". Reuters. Retrieved 18 January 2024.
  25. ↑ Da-sol, Kim (21 February 2018). "Lotte chief steps down as CEO from Japan-based holding firm". The Korea Herald . Retrieved 18 January 2024.
  26. ↑ Kim, Sohee (5 October 2018). "Lotte Chairman Shin Freed as Court Suspends Corruption Sentence". Bloomberg. Retrieved 18 January 2024.
  27. ↑ Minji, Lee (17 October 2019). "(2nd LD) Top court upholds suspended jail term for Lotte chief". Yonhap News Agency . Retrieved 18 January 2024.
  28. ↑ Da-sol, Kim (13 March 2019). "[News Focus] Lotte seeks to exit China after investing $7.2b". The Korea Herald . Retrieved 19 January 2024.
  29. ↑ "Lotte suffers over 1tn won loss in China: chairman's brother". The Korea Herald . 28 October 2015. Retrieved 19 January 2024.
  30. ↑ Kyong-ae, Choi (30 September 2016). "S. Korea selects golf course as new site for THAAD". Yonhap News Agency . Retrieved 19 January 2024.
  31. ↑ Park, Byeong-su (1 October 2016). "Why was the Lotte Skyhill golf course chosen as the new site for THAAD deployment?". Hanyoreh. Retrieved 19 January 2024.
  32. 1 2 Cynthia Kim and Hyunjoo Jin (25 October 2017). "With China dream shattered over missile land deal, Lotte faces costly overhaul". Reuters. Retrieved 19 January 2024.
  33. 1 2 "South Korea's Lotte seeks to exit China after investing $9.6 billion, as Thaad fallout ensues". The Straits Times. 13 March 2019. ISSN   0585-3923 . Retrieved 19 January 2024.
  34. ↑ Hernández, Javier C.; Guo, Owen; Mcmorrow, Ryan (9 March 2017). "South Korean Stores Feel China's Wrath as U.S. Missile System Is Deployed". The New York Times . ISSN   0362-4331 . Retrieved 19 January 2024.
  35. ↑ Kim, Jae-heun (23 May 2022). "Lotte to pull out of China, focus on Southeast Asia". Korea Times. Retrieved 19 January 2024.
  36. ↑ Van, Tong (23 May 2022). "Lotte prepares to shut its China headquarters". Inside Retail Asia. Retrieved 19 January 2024.
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