Lotte Group Chairman says to sell ailing units for new biz: report

Lotte Group plans to sell ailing units as the South Korean retail-to-chemical conglomerate is shifting its focus to new growth sectors such as bio, the metaverse, hydrogen energy and electric vehicle battery materials, its head said.

The group has changed its business strategy, previously concentrated on expansions through acquisitions and stock listings, Lotte Chairman Shin Dong-bin said in an interview with the Yomiuri Shimbun published on Tuesday.

“We bought some 60 large and small companies, but we have now changed the policy,” Shin was quoted as saying. “We are proceeding with not only acquisitions but also sales.”

“We plan to sell several businesses in the future as we think for employees it would be good to let other companies manage those that have not been doing well for years,” said Shin without elaboration, according to the Japanese daily.

Lotte Chemical Corp., the group’s petrochemical unit, tried to sell off its Pakistani PTA subsidiary to local chemicals producer Lucky Core Industries Ltd., although their talks collapsed.

The sixth-largest conglomerate in South Korea selected four future growth sectors in which to seek new businesses, Shin said.

“We are continuously changing our core businesses to those of biotechnology, metaverse, hydrogen energy and secondary battery materials, which are expected to grow in the future,” he was quoted as saying.

The group made its foray into the biopharmaceutical area in 2022 after acquiring Bristol Myers Squibb’s (BMS) biologics plant in Syracuse in the state of New York for $160 million. Lotte Chemical took over a major domestic battery ingredient maker Iljin Materials Co., currently Lotte Energy Materials Corp., at some 2.7 trillion won ($2 billion).

SEEKING EXTERNAL TALENT

Shin said Lotte is looking externally for top talent for those businesses in Japan, according to the Yomiuri.

“We did not have much external talent as our business (in Japan) has been based on the Japanese style,” Shin told the paper. “But we are now actively hiring professional talent since we think new talent should handle new fields.”

In Japan, life-long employment is a common practice. Companies often recruit a fresh graduate and develop that individual’s professional skills and knowledge over time.

Shin said it is easier to hire external talent in South Korea than Japan, according to the newspaper.

“It is very difficult to attract top-tier talent from other companies in Japan after announcing a plan for a biotechnology business. But we can do it in Korea.”

GEOPOLITICAL RISKS

Shin said Lotte will consider geopolitical risks in terms of its global operations as it had to give up businesses in China, the world’s second-largest economy, according to the Yomiuri.

The group was hit by a diplomatic row between Beijing and Seoul over South Korea’s decision to deploy a US-led Terminal High Altitude Area Defense (THAAD) anti-missile system in 2016.

“We had department stores, supermarkets, drinks and confectionary factories in China, but we had to withdraw from the market due to China’s backlash after we provided land to the US forces at South Korea’s request.” Shin was quoted as saying.

“We have been focusing on emerging Asian countries for overseas businesses, but we will have no choice but to consider various issues such as geopolitical risks.”

The conglomerate is set to concentrate more on profits and customers than sales, Shin said.

“In the past, we aimed to become one of the top ten in Asia by sales, but I think (that strategy) is a bit problematic,” Shin was quoted as saying. “It is better to consider profits and customer satisfaction in the future.”

Meanwhile, Shin said the feud with his elder brother Shin Dong-joo, a former vice chairman of Lotte Holdings, over control of the group is completely over, the Yomiuri reported.

“The management dispute has been resolved. As a public company, we’d like to make that clear,” the chairman said.

Write to Ji-Yoon Yang at yang@hankyung.com
 

Jongwoo Cheon edited this article.