Fashion
The Korea Customs Service awarded the three biggest remaining 10-year downtown duty free licenses in Seoul to Lotte Duty Free, Shinsegae DF and the Hyundai Department Store yesterday.
At the same time, ‘Top City’ won the one small, medium enterprise Seoul contract, while the two remaining provincial licenses were gained by Busan Duty Free and Alpensia.
These results follow the submission of substantial business plans by all parties from last October and an unprecedented and intense effort by South Korea’s market leading duty free retailer Lotte Duty Free. This follows its deep disappointment at losing its duty free license at its Lotte World Tower store last November.
ALL OR NOTHING BID PAYS OFF FOR LOTTE
Lotte’s intense last-ditch campaign included a pledge to invest Won2.3 trillion ($1.97bn) on tourist-related investments in the upmarket Gangnam quarter of Seoul between 2017 to 2021.
In addition, it promised to support small and medium-sized business partners and to attract more than 17m foreign tourists. [Financial criteria was one of the main criteria in the offer evaluations-Ed].
The operator also gave an unprecedented undertaking to create 34,000 direct and indirect jobs, while creating substantial foreign exchange income.
The Korean Customs Service (KCS) will now fall under both regulator and media spotlights to make sure these and all other promises by other winning retailers are kept – and especially considering KCS itself has also been the subject of investigations into its conduct recently.
SOME BIDDERS WILL BE VERY DISAPPOINTED
There are also some significant losers in this process, with neither SK Networks or Shilla Duty Free’s bids proving successful for any of the big Seoul downtown contracts.
This will be particularly disappointing for SK, which has long been known for its downtown WalkerHill Duty Free operation which lost its duty free license at the same time as Lotte last November.
Meanwhile, the ‘soap opera’ continues which has effectively cost President-Park-Geun-hye her job after so enraging the South Korean people.
All eyes will now be on the ongoing investigation into the activities of Park’s associate Choi Soon-sil, who remains under house arrest charged with abuse of position and attempted fraud.
Choi is alleged to have ‘persuaded’ various businesses into paying millions of dollars to supposedly government-linked foundations, in return for favours – including some allegedly linked to duty free licenses.
SK Group head Chey Tae Won and Lotte Group Chairman Shin Dong-bin were both questioned on national television at Seoul’s National Assembly earlier this month – along with several other heads of major companies – but all denied they were ‘persuaded’ to pay monies in return for any favours.
PUBLIC RELATIONS REPAIR WORK
Meanwhile, Lotte Duty Free has expressed its thanks for being awarded this latest concession.
In a statement entitled ‘Adoption of patent company selection‘ which was forwarded to TRBusiness, it said: “First of all, I am most fortunate to have been able to return to my original job with about 1,300 employees who had been in deep anxiety as I waited for work at World Tower in the past six months.
‘HEARTFELT GRATITUDE’ EXPRESSED
“I would like to express my heartfelt gratitude to the jury members for their fair and objective examination to enhance the competitiveness of the duty free industry in Korea, despite the fact that the psychological burden was not so small.
“We are also grateful to all of our employees who have devoted themselves to the growth and development of Lotte Duty Free as a global duty-free enterprise for the past 36 years.
“Lotte Duty Free will do its best to faithfully fulfil the contents of the business plan submitted to the KCS in the future. Through aggressive investment and development of Korean Wave content, we will be able to attract foreign tourists and create jobs, as well as coexist with small and medium-sized enterprises, thereby fulfilling our social responsibilities and becoming a more mature company contributing to the local economy and the national economy.
“Most of all, Lotte Duty Free will do our best to open up the future of tourism in Korea by raising the global competitiveness of domestic tourism industry with greater responsibility.”
