South Korea's retail giant Lotte Group is targeting 3.75 billion yuan in food and beverage sales in China by 2011 and increase it to 8.33 billion yuan by 2016, when it aims to become a global leader in the sector.
Part of these objectives will be achieved with a $30-million holding company that was unveiled yesterday.
The retail giant is trying to press further into China's highly competitive food and beverage sector as the means to consolidate its position in South Korea and Japan.
"China will be an experimental field for globalizing our business," said Dong Bin Shin, the group's vice-chairman and board chairman.
"We expect to make considerable achievements in China based on our success in South Korea and Japan."
The holding company, named Lotte (China) Investment Co, will be in charge of sales and operations of Lotte's nine Chinese food subsidiaries, including Lotte China Foods Co, and control its eight local retail and petrochemical affiliates for the time being.
The group's South Korean affiliates - Lotte Chilsung Beverage Co and Lotte Confectionery Co - each purchased a 33 percent stake in the holding company with a paid-in capital of US$30 million, while Japan's Lotte Co bought the rest.
"We'll integrate our resources in China to make our business grow across the country," Keizo Nishimura, Lotte (China) Investment's president, said yesterday.
"The newly founded company will serve as the headquarters for our business in China's food industry, and we plan to set up similar headquarters for our department store, oil and chemistry businesses here."
The group is also studying the possibility of tapping the sightseeing industry and set up amusement parks in China, but Nishimura refused to elaborate.
It has decided to found a research institute in the second half of this year, developing food and beverage that cater to traditional Chinese flavors.
"The 27 professionals we hired last year are receiving intense training abroad. They will be deployed in China to hold key positions this September," Nishimura said.
Founded by Shin Kyuk Ho in Japan in 1948 as a bubble gum maker, Lotte Group now runs 44 companies in South Korea, 19 in Japan and 18 in China.
So far, Lotte, a food and leisure group spanning hotels, confectionery and amusement parks, has injected US$364 million and holds assets worth $2.89 billion in China.
On January 29, South Korea's Lotte Confectionary Co and Hershey, the largest US candy maker, signed an agreement to create an US$80 million venture to market products in China. From August, they will distribute their own products here through each other's networks.
(China Daily March 20, 2007)