[East Asia Summit] Korean Retail Gurus Allure Chinese

Korean retail companies are starting to put spurs to globalization by making the Korean way useful in overseas markets.

Lotte Department store is on the process of writing a new chapter of successful story in Korean retailers after it launched the first store in Beijing last August in 2008.

The operator of Korea`s largest department store chain tapped into the consumption potential stemming from a burgeoning group of wealthy Chinese by offering different services from local stores including thorough customer services and up-scale facilities.

The store has been built in a key commercial area in Beijing, and Lotte aimed to foster the area into a central shopping and tourism zone.

As a result, the sales in Beijing for initial five months till May in 2009 jumped up by 26.7 percent from the same period between August and December in 2008. South Korea's No. 1 department store operator is taking another stab at the global market by planning to open its third emporium in Tianjin, China in 2011. The four-story, 28,400-square-meter store in northern China will be invested and developed solely by Lotte.

Lotte's cutthroat competitor Shinsegae is also exploring overseas ventures. Shinsegae opened its first store in Chinese soil back in 1997 and operate it with success by providing Korean-style services along with efforts to localization. .

Shinsegae is already operating 13 E-Mart chains in China, and its Vice Chairman Chung Yong-jin said recently that he will focus on the China business for the next five years.

The first move was to renovate the interior facility in order to provide Chinese customers with opportunities to have different experience in the store from local major retailers and global rivals like Carrefour and Wal-Mart.

Meanwhile, the company pursued Chinese style when operating the store and introducing a new set of items and products. To do so, it hired Chinese general managers for all posts in China.

CJ is also expanding its territories towards China with the know-how and competitiveness which were built up in Korean market.

The Korean retail guru established CJ China Headquarters in 2006 at the 10-year anniversary, providing the Chinese division with more control to manage the local stores in China.

Localization is the first priority that the company look for in the overseas markets.

For instance, the Qingdao Food Corp. is the representative global marketing organization which is actively promoting CJ’s brand building project through its sales and marketing activities targeted at local consumers by attaching the CJ brand name to locally manufactured products.

The food business for domestic consumption in China is carried out with ‘Dashida’, the No. 1 brand of CJ to occupy MS 70% or more in the Korean market. The Dashida business, for which local production/ sale/ marketing has been carried out in full scale since 2002, has been actively administering promotional activities since 2003 in 8 places, including the northern regions of the Beijing district and 3 provinces in Northeastern China. It has relied on its local sale/marketing know-how accumulated through its import and sales activities over the last 10 years.

As a result of such effort and resource investment, remarkable outcomes have been achieved in target market areas and CJ’s food division of China is establishing a success model. On the basis of this, CJ is planning to complete development of chicken Dashida to suit tastes of Chinese people by the end of 2006 in order for market expansion through active advertisement and promotional activities. CJ is also gradually expanding its seasoning/soup and B2B businesses.

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