South Korean retailing giant eyes economic hub

The retailer, which has recently filed an application for an investment licence at the Ministry of Planning and Investment (MPI), plans a $15-million investment in the initial stage of development. The following stages will see Lotte Shopping’s investment value in the country rise roughly 30-fold in the next 12 years.
A source from the Ho Chi Minh City Authority said that the venture plan was developed following Lotte Shopping chief Lee Chul Woo’s visit to the southern city last year in order to study the local business environment and seek opportunities for investment.
The source disclosed that Lotte Shopping would secure a partnership with a local trading company, whose shareholding ratio is only 10 per cent of the venture.
The venture’s partners were not available for comment when Vietnam Investment Review contacted them.
Lotte Shopping is one of the retail operations of the Lotte Group, which is recognised as the eighth largest business group in Korea in terms of assets. Lotte Shopping is currently operating Korea’s largest chain of department stores. The chain includes 19 Lotte stores with an average floor space of 1,100 sq.m and a total annual revenue of almost $6 billion. The Lotte group has already made investments in Vietnam through the fast-food chain Lotteria.
Vietnam is opening the country’s service market in a phased way in line with its commitment to gain a membership in the World Trade Organization (WTO). The latest licensee in the wholesale and retail distribution network in Vietnam is Malaysia’s leading shopping mall operator Parkson Corporation, a subsidiary of Lion Diversified Holding Bhd.
It follows France’s, Groupe Bourbon, which came to Vietnam in 1998 and is operating three hyper-markets in Hanoi, Dong Nai and Ho Chi Minh City, and Germany’s Metro Cash&Carry, which came to the country in 2001 with a $120 million investment licence to open eight wholesale Cash&Carry centres in major cities. Metro has opened outlets in Hanoi, Haiphong, Danang, Can Tho and Ho Chi Minh City.
Parkson, with 36 stores in Malaysia and 40 others in China, and which gains an average annual sales revenue of $1.32 billion, has also planned 10 retail stores in major cities like Hanoi, Ho Chi Minh City, Danang, Can Tho, Hue and Vung Tau with total investment capital of $70 million.
With average annual growth of 20 per cent in retail sales, Vietnam is proving to be very attractive to foreign retailing businesses. VIR learnt that several firms, such as China’s Shenghui Group and the UK’s Tesco, are also exploring ways to enter Vietnam.


No. 747/February 6-12, 2006