Lotte chief visits Tokyo amid anti-Japanese sentiments in Korea

The chief of South Korean retail giant Lotte Group -- with deep family roots in Japan -- is attempting to douse the flames following a diplomatic row between Tokyo and Seoul early this month that will hamper operations of domestic conglomerates.

Lotte Chairman Shin Dong-bin has embarked on a trip to the neighboring country amid the spat over Japan’s decision to restrict shipments of key materials used by Korean chipmakers and display makers, according to the firm. 

The chairman, along with Samsung Electronics Vice Chairman Lee Jae-yong who is also visiting Japan, will be absent from President Moon Jae-in's emergency meeting with leaders of 30 conglomerates in South Korea on Wednesday.

Local reports, citing his family’s decades-long ties with Prime Minister Shinzo Abe’s father and grandfather, suggested Shin may be seeking a breakthrough by mobilizing his network. Abe was a guest at his son’s wedding four years ago.

The deteriorating bilateral relationship is troublesome for Lotte which faced a backlash in China following the so-called THAAD crisis two years ago, when it leased space for the US anti-missile system.

The decision to deploy the system led to negative sentiments across China, with shops and restaurants publicly rejecting Korean products and brands. It ended with Lotte Mart -- a supermarket chain which was expanding its retail network in China -- withdrawing its entire operations. Some food and beverage factories in China are also on sale.

Lotte downplayed market expectations on Shin’s role as a civil diplomat, saying that his itinerary is a part of his regular “shuttle” business.

“The chairman is scheduled to meet Japanese investors. We don’t know whether he will meet Abe,” said a Lotte official.

“The expectations on our chairman’s role in fixing bilateral ties seems far-fetched.”

After Shin returns, he is scheduled to hold a five-day seminar with Lotte executives next week.

Titled “Value Creation Meeting,” Shin will discuss the group’s business strategy for the second half of the year, the company said, raising speculation on his reaction at this critical time.

It is the first time that Shin is holding an executive meeting for five days, according to officials.

Lotte is not involved in chip manufacturing, a business that has been hit hard by Japan’s unexpected retaliatory moves.

But fears are growing that it could be swayed by public antagonism against Japanese companies here.

Despite its repeated affirmation of being a Korean conglomerate, Lotte’s ambiguous identity has been questioned for years.

The conglomerate makes most of its revenue here but is controlled by a small investment company set up by its founder Shin Kyuk-ho in Japan.

The family, including incumbent Chairman Shin, the founder’s youngest son, has a strong base in Japan, often triggering doubts on the origin of the group that operates mostly business-to-consumer businesses -- retail, confectionary and hotel services –- sensitive to consumer reactions.

Lotte also has a number of joint ventures with Japanese brands such as Uniqlo and Muji, and imports a vast range of Japanese products.

Lotte Shopping which holds 49 percent shares in FRL Korea, the local subsidiary of Fast Retailing Group that owns Uniqlo, saw its shares declining 4.13 percent to 151,000 won ($128). Shares of other key affiliates also dropped with Lotte Chilsung falling 2.73 percent to 160,500 won and Lotte Chemical down 2.91 percent to 250,000 won.

By Cho Chung-un (christory@heraldcorp.com)