Korean retail giant to go it alone

South Korea's Lotte Department Store announced Wednesday that it will open 20 wholly-invested stores in China, trying to snap up more of the world's fastest growing economy amid an increasingly saturated retail market at home.
The new plan will give the retail giant 20 department stores across China by 2018, including outlets in Chengdu, Sichuan Province, Shenyang, Liaoning Province, as well as Chongqing and Shanghai Municipalities, David Joung, president of Lotte Business Management (Tianjin) Co said.
Joung made the remarks in a signing ceremony with Tianjin Galaxy Mall, a 7 billion-yuan ($1.06 billion) retail complex serviced by realtors, E-commercial (China) Holding Ltd and London-listed Savills.
Lotte Department Store is part of Lotte Shopping Co Ltd, South Korea's fifth-larg-est conglomerate in terms of assets, Reuters reported.
In 2008 Lotte Department Store opened its only joint venture (JV) with Intime De-partment Store, known in China as Intime Lotte Department Store. The store is lo-cated on Wangfujing Street, a commercial area in Beijing.
The first of the 20 new department stores, to be located in Tianjin, will tout products from some 350 different brands on display in the 70,000-square-meter store.
Joung attributed the overseas expansion to the fact that the retail sector in South Korea has hit bottom, and China will be their next important growth market.
Figures show that in the first 10 months of last year, total Chinese consumer retail sales hit 12.5 trillion yuan ($1.89 trillion), a year-on-year growth of 18.3 percent.
In November last year, the French department store Galeries Lafayette declared that it will return to Beijing after more than a 10-year absence.
However, market watchers said Lotte's plan to open wholly-invested stores may indicate problems may exist in the JV itself.
According to Intime Department Store data, the 50-50 JV, which was opened in August, witnessed losses of 102 million yuan ($15.44 million) by the end of 2008, and Intime predicted in 2009 that the bleeding will continue.
"The JV may have experienced cross-cultural conflicts, but the wholly-invested plan may (help) ensure development strategies," Xiao Mingchao, deputy general manager of Sinomonitor International, a market research company, Thursday told the Global Times.
Xiao added that opening department stores in second and third-tier cities for Lotte Department Store still has a competitive edge due to the lack of serious rivals.
"But for saturated first-tier cities, the store may be regarded as symbolic."
However, for the coming wholly-invested department store in Tianjin, Lotte's Joung said, "We have not considered the investment and return yet," without disclosing investment figures.
Joung emphasized that the store will have "good customers care" compared with other rivals, no matter from before sales, on sales or after sales.