Lotte World Tower duty free store has reopened
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As expected, Lotte Duty Free opened its World Tower flagship duty free outlet yesterday, following a six-month period of uncertainty caused by last June’s closure of the duty free section in the building.
The opening follows the well-publicised and controversial shock loss of Lotte’s duty free operating license for this store back in November 2015.
As reported, the Korea Customs Service (KCS) awarded the 10-year duty free license to Lotte Duty Free on 17 December 2016. However, it has clearly stated since that if the operator is subsequently found guilty of any wrongdoing in its ongoing investigations related to a contributions scandal, then it will revoke the award.
INVESTIGATIONS CONTINUE OVER ALLEGED CASH FOR FAVOURS
As reported, this ongoing investigation surrounds requests for multi-million dollar equivalent monetary contributions for foundations, which were made to Lotte and other companies by President Park Geun-hye’s former close friend Choi Soon-sil, who is presently under arrest.
Park’s relationship with Choi – a friend for 40 years – was also one of the key factors which led up to her impeachment last month, although Choi denies all the charges related to abuse of power and fraud.Park also maintains that she has not been involved with Choi in any wrongdoing, although she has publicly expressed regret at allowing Choi to get too close to matters of government.
Meanwhile, Lotte has given several bold undertakings to attract foreign tourists and create new jobs alongside the award of this new contract, which the Korean Customs Service – itself under pressure – will doubtless expect it to meet.
MASSIVE INVESTMENT PROMISES
“As reported earlier this month, Lotte has pledged to invest Won2.3 trillion ($1.97bn) on tourist-related investments in the upmarket Gangnam quarter of Seoul between 2017 to 2021.”
As reported earlier this month, Lotte has pledged to invest Won2.3 trillion ($1.97bn) on tourist-related investments in the upmarket Gangnam quarter of Seoul between 2017 to 2021.
Lotte Duty Free spokesman Jihyun Ethan Choi also formally confirmed to TRBusiness (2 January) that the duty free reopening has naturally come as a huge relief to Lotte’s staff.
They have had to endure a six-month wait to find out whether they would have jobs or not at the World Tower – subject to winning the license or not. (Lotte employs around 1300 individuals at the World Tower).
CHINESE TOURIST ARRIVALS CONCERNS
At this time, Lotte and all other duty free operators in South Korea will also be keenly monitoring the levels of Chinese tourist arrivals over the next few months, since their biggest overseas duty free customers (in sheer spending power terms) registered only +1.8% growth – or 516,956 visitors – in November 2016. This was a big drop from previous double-digit numbers, according to the Korea Tourism Organization (KTO).
Many commentators are not surprisingly pointing to pressure on Chinese tourists to cool their enthusiasm for South Korea in the wake of its government decision to site a US-built missile defence system on the border with North Korea. China says this system has the ability to gather data on surrounding terrain in the region.
Questions & Answers
Q.What could happen to Lotte Duty Free's recently awarded operating license?
What could happen to Lotte Duty Free's recently awarded operating license?
The Korea Customs Service has stated it will revoke the award if Lotte is found guilty of any wrongdoing in the ongoing investigations. This condition was clearly communicated when the license was granted.
Q.What impact are Chinese tourist arrivals having on duty-free operators in South Korea?
What impact are Chinese tourist arrivals having on duty-free operators in South Korea?
Chinese tourist arrivals showed only a +1.8% growth in November 2016, a significant drop from previous double-digit figures. This trend is a concern for Lotte and other operators, as Chinese tourists are their biggest overseas customers.
Q.What assurances has Lotte given regarding its new contract?
What assurances has Lotte given regarding its new contract?
Lotte has made bold undertakings to attract foreign tourists and create new jobs. It has also pledged to invest Won2.3 trillion ($1.97bn) in tourist-related investments in Seoul's Gangnam quarter between 2017 and 2021.
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