Retail and beyond

Shin Kyuk-ho (86) ?Lotte Group chairman ?Bachelor뭩 in chemistry,Waseda University

The faces inside Korea’s conglomerates is a weekly series about key figures in major conglomerates to help readers understand Korea’s business world.

More than 40 years after its founding, the Lotte Group is branching out.

The jaebeol, whose business interests range from food and retail to finance and heavy chemicals, has always been seen as a company focused on producing for the domestic market, but this is changing.

It also has a reputation for being conservative in its business operations. For example, the Lotte Group has one chairman, one vice chairman and only eight presidents among all its 46 subsidiaries, while other conglomerates have double or triple that number.

These management approaches center around Shin Kyuk-ho, Lotte Group founder and chairman.

Shin, who founded what is now Korea’s fifth-largest conglomerate while in Japan in his 20s, is one of the very few jaebeol founders who still actively runs the business.

On the wall of Shin’s office hangs a framed calligraphy of a four-character saying, “Geo-hwa-chwi-sil.”

Shin Dong-bin (53) ?Lotte Group vice chairman ?Bachelor뭩 in business, Aoyama Gakuin University ?MBA, Columbia Universit

The ancient phrase admonishes to stay away from ostentatious display and aim for substance.

Lotte’s recent forays are taking the group in new directions as it ventures into China and Russia, as well as spreads its wings in fields far from its core businesses, retail and food. During the last five years, the Lotte Group has added Lotte Insurance Co., KP Chemical Corporation, Lotte Home Shopping and Lotte Card to its list of subsidiaries.

As of last year, Lotte Group’s total worth was 43.6 trillion won ($29.5 billion) and its yearly sales came to 31.8 trillion won, according to the Fair Trade Commission.

Shin, 86, started Lotte Co. in 1948 in Tokyo selling candy and chewing gum. Shin also goes by his Japanese name, Takeo Shigemitsu, and still travels back and forth between the two countries watching over business operations, spending odd numbered months in Korea and even numbered months in Japan.

Lotte Co. still operates in Japan separately from Korea’s Lotte Group. It specializes in confectionery, beverages, ice cream and the Lotteria fast food chain.

Shin is known in the industry for his hands-on approach, often visiting Lotte Department Stores and Lotte World in person.

Whereas Shin founded the group to focus on the domestic market, his son and Lotte Group Vice Chairman Shin Dong-bin, 53, wants to move the group to the global limelight.

Starting his Lotte career in 1990 at Honam Petrochemical Corp., he was promoted to Lotte Group president in October 2004.

Shin Dong-bin has successfully expanded the group during the last few years.

Under his direction, Lotte Group bought a unit of Hyundai Petrochemical Co. (renamed Lotte Daesan Petrochemical Corp.), KP Chemical, and Daehan Fire & Marine Insurance (renamed Lotte Insurance Co.).

He is also advancing into Vietnam, Russia, India and China, which are seen as target emerging markets for the group.

Starting with a Lotte Department Store in Beijing in August, the group has been opening retail stores in China and Russia.

A Vietnam branch of Lotte Mart is set to launch this month.

Lee In-won, another Lotte Group president, serves as the Shins’ crucial right hand. Lee, 61, started his career in the conglomerate in 1973 at Lotte Hotel. Boasting a resume of accomplishments, including becoming CEO of Lotte Shopping Co., the group’s core business, in 1997 when he was 50, he is known for thoroughness and careful attention to detail.

The three above-mentioned people make up the group’s foundation but the heads of Lotte’s core affiliates are the eyes and ears of the different industries Lotte has been involved with.

First, there is Lee Chul-woo, CEO and president of Lotte Shopping’s department store division since February 2007.

The Seoul National University grad’s experience in retail (he is a former Lotte Mart CEO) and a team-oriented approach have given him a reputation for being one of the most employee-friendly CEOs in the group.

Along with Shin Kyuk-ho, Lee is known for his being involved in day to day operations.

Last year in May, Lee gave 60 of the department stores’ merchandise displayers notebook computers so that they could gather direct customer responses while working in the field.

Under his leadership, Lotte Department Store opened its first store in Russia last year. This year, his efforts to globalize the company expanded again as the department store opened branches in Beijing.

Honam Petrochemical Corp. CEO and President Chong Bum-shick was one of the petrochemical company’s founding members in 1976. Chong, 60, also an SNU alum, majored in engineering. With both academic and practical industry credentials, he is a member of the National Academy of Engineering of Korea.

Appointed CEO of Honam Petrochemical last year, he is also head of Lotte Daesan Petrochemical.

Lee Chang-bae, CEO and president of Lotte Engineering and Construction Co., started in retail at Lotte Hotel and moved to the construction unit in 1999 as executive director.

Even during a real estate slump after he became CEO in 2004, he was known for carrying out projects including project financing ventures in Pangyo New Town and Incheon’s Cheongna District, and a tourism/resort business in Haeundae, Busan.

The group’s resident food industry expert is Lee Kwang-hoon, CEO and president of Lotte China Foods Co.

Lee has over 30 years of experience in the field working for Lotte’s three food companies including Lotte Confectionery, Lotte Samkang and Lotte Chilsung.

He also serves a vital role in Lotte’s globalization, especially in the abundant Chinese market.

Since 2007, Lee has been concentrating on making inroads into China’s chocolate industry.

By Cho Jae-eun Staff Reporter [jainnie@joongang.co.kr]