Lotte Chairman Shin Dong-bin urges company to embrace AI

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Lotte Chairman Shin Dong-bin urges company to embrace AI

Published: 18 Jan. 2024, 18:46 Updated: 19 Jan. 2024, 01:23

SEO JI-EUN
seo.jieun1@joongang.co.kr

Lotte Chairman Shin Dong-bin and other executives attended a memorial ceremony for the fourth anniversary of founder Shin Kyuk-ho's passing at Lotte World Tower in southern Seoul on Thursday. [LOTTE CORPORATION]

Lotte Chairman Shin Dong-bin called for swift overseas expansion and the integration of AI across the conglomerate's business sectors in an executive meeting on Thursday.

The Value Creation Meeting (VCM), held twice annually, brought more than 80 key figures including Chairman Shin, Lotte Holdings President Genichi Tamatsuka and leaders from various business divisions to Lotte World Tower in southern Seoul on Thursday. Shin's eldest son, Shin Yoo-yeol, who was recently promoted to senior vice president of the group's future strategy office, was also present.

Chairman Shin highlighted the fact that Lotte Mall West Lake Hanoi, opened in September last year, is anticipated to become the quickest among Vietnam's shopping malls to reach sales of 100 billion won ($74 million). He urged the “development of business models akin to Lotte Mall West Lake Hanoi to effectively lead the market,” as per Lotte Corporation's statements.

Acknowledging challenges related to domestic and global economic downturn, Shin predicted that this year would be characterized by “extreme uncertainty.” Shin called on Lotte Group to “exhibit strong execution capabilities and position itself as a leader in the global market during this new era,” outlining management policies and CEO roles designed to facilitate growth under various circumstances.

Regarding global business expansion, Chairman Shin advised “a proactive approach in considering entry and expansion into countries with growth opportunities.” He also emphasized the importance of flexibility in responding to uncertainty in the current volatile times.

Emphasizing the significance of AI in fostering innovation, Chairman Shin encouraged a perspective shift, viewing AI not only as a tool for operational efficiency, but also as a “fundamental means to enhance intrinsic competitive advantages.”

Lotte currently faces challenges due to economic downturn both domestically and internationally.

The retail sector — which is the backbone of Lotte's businesses, including its department store, duty-free and home shopping divisions — experienced significant decline in its sales and profits last year due to weak consumer sentiment amid high inflation and interest rates. The department store sector, in particular, reported a 31.8 percent on-year decline in operating profit in the third quarter of last year. Its online shopping business also reported a 23 billion won operating loss in the same period due to heightened competition with robust players like Coupang.

Lotte Engineering & Construction faces a liquidity shortage as the fallout from risky real estate project financing loans spreads across Korea's construction industry. Lotte Chemical, its largest shareholder, is also under scrutiny. Lotte Homeshopping suffered losses of 8 billion won due to last year's unprecedented suspension of early-morning broadcasts.

Chairman Shin, alongside other executives, commemorated the fourth anniversary of founder Shin Kyuk-ho's passing prior to the VCM.

BY SEO JI-EUN [seo.jieun1@joongang.co.kr]