Wikipedia

Lotte Corporation

(Redirected fromLotte (conglomerate))
"Lotte (conglomerate)" and "LOTTE" redirect here. For the Japanese company, seeLotte Holdings.

Lotte Corporationis a South Koreanmultinationalconglomeratecorporation,and the fifth-largestchaebolin South Korea.[1]Lotte was founded on June 28, 1948, by Korean businessmanShin Kyuk-hoinTokyo.Shin expanded Lotte to his ancestral country, South Korea, with the establishment ofLotte ConfectioneryinSeoulon April 3, 1967.

Lotte Corporation
Native name
  • 롯데그룹
Company typePublic
KRX:004990
IndustryConglomerate
FoundedMarch 24, 1967;57 years ago(1967-03-24)
FounderShin Kyuk-ho
HeadquartersSongpa District, Seoul,
South Korea
Areas served
Worldwide
Key people
Subsidiaries
Korean name
Hangul
롯데그룹
Revised RomanizationRotdegeurup
McCune–ReischauerRottegŭrup, Rotte-kŭrup
Websitewww.lotte.co.kr

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 inChina,Thailand,Malaysia,Indonesia,Vietnam,Cambodia,Uzbekistan,India,theUnited States,theUnited Kingdom,Kazakhstan,Russia,thePhilippines,Myanmar,Pakistan,Poland(Lotte bought Poland's largest candy companyWedelfromKraft Foodsin June 2010),AustraliaandNew Zealand(Lotte successfully bought 4 duty-free stores in Australia and 1 in New Zealand fromJR/Groupin 2019[3]).

History

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Lotte was founded in June 1948, by Korean businessmanShin Kyuk-hoinTokyo,Japan, two years after he graduated fromWaseda Jitsugyo High School(Tảo đạo điền thật nghiệp học giáo). Originally calledLotte Co., Ltd,the company has grown from sellingchewing gumto children in post-war Japan to becoming a majormultinational corporation.[citation needed]

Name

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The source of the company's name is German. Shin Kyuk-ho was impressed withJohann Wolfgang von Goethe'sThe 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

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Lotte Department Store in Seoul
Lotte New York Palace Hotel

Lotte Corporation– is located inSongpa-gu,SeoulandLotte Holdings Co., Ltd.inShinjuku,Tokyo. It is controlled by the founderShin Kyuk-Ho's extended family.

Business

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

Sports

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Lotte also owns professionalbaseballteams:

Lotte R&D Center

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Controversies

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Treatment of Beluga Whales

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Lotte Corporation has received negative press attention due to treatment of a captivebeluga whalenamed Bella, currently held in the Lotte World Aquarium Attraction inSeoul.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.[9]In 2019, Lotte Corporation pledged that they would release Bella from captivity.[10]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.[11]The corporation has also been criticized by civic groups for a lack of updates or cohesive plan for retiring Bella to a sanctuary.[12]

2016 embezzlement Scandal

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In June 2016, the police conducted a probe into Lotte Corp for a possible slush fund and embezzlement.[13]The Seoul Central District Prosecutor's Office reported that 240 investigators raided 17 Lotte offices, including its central Seoul headquarters and the homes of founderShin Kyuk-ho,ChairmanShin Dong-binand other key executives, with 15 more offices being raided just a week later.[14]

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.[15]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).[16]Lotte Chemical Corp also withdrew from bidding forAxiall Corpin the wake of the scandal.[13]

On June 13, 2016, Lotte announced it would withdraw itsinitial public offering(IPO) forHotel 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.[17]Lotte spokesperson Choi Min-ho told theKorean Herald,“we physically cannot meet next month’s deadline to complete the Hotel Lotte IPO given the current circumstances".[18]Despite local press reporting that ChairmanShin Dong-binwas keen to restart Hotel Lotte's IPO in 2020, Hotel Lotte is still yet to go public.[19]

In August 2016, Vice Chairman Lee In-won was found dead in his car with a four-page long suicide note.[20]His death came just hours before he was due to be questioned by prosecutors.[21]Lee was considered the top lieutenant of ChairmanShin Dong-bin.[13]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".[20]

In October 2016, the Seoul Central District Prosecutors' Office closed their investigation. The probe accused Lotte founderShin Kyuk-ho,his son ChairmanShin Dong-bin,along his mistress Seo Mi-kyung and two other children of embezzling₩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 byLotte 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).[16]In total, the allegations of misconduct amounted to₩375.5 billion (US$328.25 million).

The following year, founderShin Kyuk-howas 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.[22]

The founder's son and ChairmanShin Dong-binwas convicted of the charges of embezzlement and breach of trust, while Dong-bin's older brother Dong-joo was acquitted.[23]

2017 Bribery Scandal

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On 17 April 2017, ChairmanShin Dong-binwas embroiled in the2016 South Korean political scandaland charged with bribery.[24]In order to secure aduty-freedeal for Lotte, Shin was accused of donating₩7 billion (US$6.12 million) to a non-profit controlled by incumbent PresidentPark Geun-hye's close friendChoi Soon-sil.[25]On February 13, 2018, Shin was fined₩7 billion (US$6.12 million) and sentenced to 2.5 years incarceration.[26]He was jailed immediately following the sentencing.[25]

Following his conviction, Shin stepped down asChief Operating Officerof Lotte Group's Japanese-based holding firm but remained on the board of directors.[27]

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.[28]News of Shin's release increased Lotte Group's market value by 4.2%.[26]

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.[29]

Losses in China

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Since 2004, Lotte had invested over₩8 trillion (US$6.99 billion) into growing their presence in China, operating 112Lotte Martstores, 12 cinemas 5Lotte Departmentstores in 2017.[30]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.[31]

To counter potential threats from North Korea, South Korea & the US sought to deploy an advanced anti-missile defence system,THAAD,in 2016.[32]The site chosen was Lotte Skyhill Country Club in Seongsan due to its high elevation, distance from civilian centres and existing infrastructure.[33]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".[34]

The installation of the THAAD system led to a rise in anti-Korean sentiment in China, with much of the ire directed at Lotte.[35]Government-controlled news media encouraged Chinese consumers to boycott the Korean conglomerate, and protests were held across multiple cities, with employees of a mall inXuchangprotesting Lotte as they sung the Chinese national anthem.[36]

Shortly after news of Lotte's co-operation with the THAAD installation, nearly all ofLotte Mart's 112 Chinese stores were closed down by the government due to supposed fire safety issues.[34]Lotte Department also suffered in the hostile business environment, with anoperating lossof₩140 billion (US$122.38 million) between 2016 and 2018.[35]Both Lotte Department Store & Lotte Mart formally ceased trading in China in 2018, withLotte Chilsung Beverage&Lotte Confectionaryleaving China a year later.[37]

In 2022, Lotte closed their Chinese headquarters, effectively ending their business operations in the mainland.[38]

See also

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References

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  1. ^"Chaebol rankings seesaw over 2 decades".Yonhap.Retrieved19 December2017.
  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.Retrieved15 February2021.
  4. ^"Lotte Hotel Seoul – Hotel Facilities, Fitness, Spa, Conference room".www.lottehotel.com.Retrieved19 August2017.
  5. ^"Korean Chaebols: Lotte. The Origin of the Lotte Name".Retrieved20 April2014.
  6. ^"Inside the Korean cinemas offering a red-carpet experience".13 September 2019.
  7. ^"LOTTE".www.lotte.co.kr.Retrieved12 June2024.
  8. ^"Zozo Marine Stadium | Travel Japan - Japan National Tourism Organization (Official Site)".Travel Japan.Retrieved12 June2024.
  9. ^Jong-young, Nam."After animal death, Lotteworld says it won't acquire more beluga whales".The Hankyoreh.Retrieved24 December2023.
  10. ^Chen, Heather; Kwon, Junhyup (1 October 2021)."This Beluga Whale Has Been Held in a Conglomerate's Aquarium for Years".Vice.Retrieved24 December2023.
  11. ^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.Retrieved24 December2023.
  12. ^"Civic groups call for release of last beluga whale from Lotte World Aquarium".The Korea Times.24 October 2023.Retrieved24 December2023.
  13. ^abcJin, Hyunjoo; Lee, Se Young (26 August 2016)."Lotte vice chairman found dead amid probe; suicide suspected".Reuters.Retrieved26 August2016.
  14. ^Sohn, Ji-young (14 June 2016)."[LOTTE CRISIS] 15 more Lotte affiliates raided in widening probe".The Korea Herald.Retrieved18 January2024.
  15. ^Choi, He-suk (14 June 2016)."[LOTTE CRISIS] Lotte firms' market cap lose another 400 billion won".The Korea Herald.Retrieved18 January2024.
  16. ^abSohn, Ji-youn (19 October 2016)."[LOTTE CRISIS] Prosecutors indict five Lotte family members".The Korea Herald.Retrieved18 January2024.
  17. ^Eun-jung, Kim (19 May 2016)."Hotel Lotte IPO expected to become S. Korea's biggest offering".Yonhap News Agency.Retrieved18 January2024.
  18. ^Kim, Youngwon (13 June 2016)."[LOTTE CRISIS] Hotel Lotte withdraws IPO as embezzlement probe deepens".The Korea Herald.Retrieved18 January2024.
  19. ^Son, Ji-hyoung (4 May 2020)."Lotte chief likely to push for Hotel Lotte IPO to win power struggle".The Korea Herald.Retrieved18 January2024.
  20. ^ab"Lotte vice chairman Lee In-won found dead".BBC News.26 August 2016.Retrieved18 January2024.
  21. ^Won, Ho-jung (31 August 2016)."Shin Dong-joo to be grilled in Lotte Group corruption probe".The Korea Herald.Retrieved19 January2024.
  22. ^"Funeral service of late Lotte founder held".The Korea Herald.22 January 2020.Retrieved18 January2024.
  23. ^Zhong, Raymond (22 December 2017)."Chairman of Lotte Group Is Convicted of Graft in South Korea, but Avoids Jail".The New York Times.Retrieved18 January2024.
  24. ^Ju-min Park & Christine Kim (17 April 2017)."South Korea charges ousted leader Park and Lotte chief with bribery".Reuters.Retrieved18 January2024.
  25. ^abSer, Myo-ja (17 October 2019)."Supreme Court keeps Lotte chairman from jail".Korea JoongAng Daily.Retrieved18 January2024.
  26. ^abYang, Heekyong (17 October 2019)."Lotte Group chairman stays out of jail as South Korea court ruling upheld".Reuters.Retrieved18 January2024.
  27. ^Kim, Da-sol (21 February 2018)."Lotte chief steps down as CEO from Japan-based holding firm".The Korea Herald.Retrieved18 January2024.
  28. ^Kim, Sohee (5 October 2018)."Lotte Chairman Shin Freed as Court Suspends Corruption Sentence".Bloomberg.Retrieved18 January2024.
  29. ^Lee, Minji (17 October 2019)."(2nd LD) Top court upholds suspended jail term for Lotte chief".Yonhap News Agency.Retrieved18 January2024.
  30. ^Kim, Da-sol (13 March 2019)."[News Focus] Lotte seeks to exit China after investing $7.2b".The Korea Herald.Retrieved19 January2024.
  31. ^"Lotte suffers over 1tn won loss in China: chairman's brother".The Korea Herald.28 October 2015.Retrieved19 January2024.
  32. ^Choi, Kyong-ae (30 September 2016)."S. Korea selects golf course as new site for THAAD".Yonhap News Agency.Retrieved19 January2024.
  33. ^Park, Byeong-su (1 October 2016)."Why was the Lotte Skyhill golf course chosen as the new site for THAAD deployment?".Hanyoreh.Retrieved19 January2024.
  34. ^abCynthia Kim and Hyunjoo Jin (25 October 2017)."With China dream shattered over missile land deal, Lotte faces costly overhaul".Reuters.Retrieved19 January2024.
  35. ^ab"South Korea's Lotte seeks to exit China after investing $9.6 billion, as Thaad fallout ensues".The Straits Times.13 March 2019.ISSN0585-3923.Retrieved19 January2024.
  36. ^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.ISSN0362-4331.Retrieved19 January2024.
  37. ^Kim, Jae-heun (23 May 2022)."Lotte to pull out of China, focus on Southeast Asia".The Korea Times.Retrieved19 January2024.
  38. ^Van, Tong (23 May 2022)."Lotte prepares to shut its China headquarters".Inside Retail Asia.Retrieved19 January2024.
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  • Official website
  • Business data for Lotte Corporation:
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