Lotte Group Chairman Shin Dong-bin, Lotte Holdings President Song Yong-duk, Lotte Holdings President Lee Dong-woo, Lotte Chemical President Kim Kyo-hyun, head of the group’s chemical business unit, other business unit chiefs, and presidents and executives of subsidiaries gesture as they participate in the Value Creation Meeting (VCM) on July 1. (Photo: Lotte Group)

Lotte Group Chairman Shin Dong-bin emphasized investments, exploration of new businesses and upgrading of the group’s portfolio through strengthening of core conventional businesses.

Chairman Shin said, “The new future is not an extension to the past, so dramatic innovation and aggressive investment need to be made in a future-oriented perspective.”

He made the remarks while presiding over the Value Creation Meeting (VCM) on July 1. Among about 130 people on hand at the meeting were Chairman Shin, Lotte Holdings President Song Yong-duk, Lotte Holdings President Lee Dong-woo, heads of the group’s food, distribution, chemical and hotel & service business units, and presidents and executives of subsidiaries. Normally, VCMs are held twice each year — in January and around July 15. This year’s VCM was moved to July 1, indicating an emergency.

At the VCM, Chairman Shin stressed the need for aggressive investments, considering the need for sharpening the group’s distribution and chemical business units, the group’s mainstay businesses.

Lotte, touted as the nation’s No. 1 distribution business, has failed to rise to the challenge of the e-Commerce sector. Lotte participated in a bid to acquire eBay Korea in vain. E-Mart was the winner of the acquisition race.

The domestic e-Commerce market has been reshaped in a tripartite structure surrounding Naver, Coopang and Shinsegae, so Lotte Group is cornered, needing to contemplate the Plan B.

But Chairman Shin demanded prioritizing of the value-added business. His remark may be related to the 3.4 trillion won, necessary to acquire a 80 percent stake in eBay Korea.

The distribution business unit of Lotte Group is known to have recommended acquiring a specialized platform as an alternative solution to acquire eBay Korea.

Lotte is predicted to take over a specialized platform, as Kakao and the e-Commerce company SSG.Com, affiliated with Shinsegae, acquired Zigzag and W-Concept Korea Co., the country’s largest multi-shop e-commerce platform for female fashion, respectively.

Kang Hee-tae, head of Lotte Distribution Business Unit and president of Lotte Shopping, disclosed a plan concerning his group’s aggressive M&A bid after giving up a bid to acquire eBay Korea.

Along with the distribution business unit, the chemical business unit badly needs to explore new growth engines. During the meeting, the chemical business unit unveiled a plan to invest 9 trillion won in four new business areas such as plastic reuse, mobility/battery, hydrogen and eco-friendly/safety materials.

Under the plan, Lotte aims to chalk up 10 trillion won in sales in the area by 2030. The plan is designed to find new growth engines in the chemical businesses based on ESG management, a Lotte Group official said.

The food business unit decided to strengthen brand strategies and R&D activities while the hotel & service business unit proposed strategies to expand consigned operation.

Last but not least, Chairman Shin stressed that innovation of corporate culture is just as important as investments. It means that the group needs to revamp its personnel system and corporate culture to secure core manpower during a period of upheaval.

Chairman Shin said hiding failures is worse than failures themselves, and what is quite worse is doing nothing with no failures.

He stressed institutional overhaul to give a good evaluation to those who have aggressively challenged and ended up in failure.

Shin told the participants that management’s most important task is securing and culturing core manpower. He said at a time in which the past’s success methods did not work, securing creative manpower will hinge on the success and failure of each business.

As for ESG management, he said all decisions have to be made in consideration of ESG elements, and practicing for show should be avoided.

ESG management should be built on the foundation of financial soundness, and a basic misunderstanding of disregarding business performances should be done away with, he said.