Competition intensifies to win lucrative duty-free operating licenses

By Park Sae-jin Posted : September 28, 2016, 15:37 Updated : September 28, 2016, 15:37

Chinese tourists shop at duty-free store located at Shilla IPark Yongsan[Photo by Namkung Jin-woong]


A battle to win South Kore's lucrative duty-free operating licenses intensified Wednesday after two rival business giants related by blood said they would try to open new stores in the same district in Seoul.

Fresh from the successful opening of Starfield Hanam, South Korea's largest shopping complex, this month, the duty-free arm of Shinsegae Group said it selected Central City, a mall complex in Gangnam, to build a new duty-free store.

Starfield is the brainchild of Shinsegae heir Chung Yong-jin who has shown an ambitious goal of expanding the group's retail business at home and abroad. He serves as vice chairman of the group chaired by his mother, Lee Myung-hee, who is the daughter of Samsung Group's late founder Lee Byung-Chul.

HDC Shilla Duty Free, a joint venture between Hotel Shilla and Hyundai Development, also disclosed its plan to secure a license for its second duty-free store in Gangnam, Seoul's most affluent district. Hotel Shilla, which has South Korea's second-largest duty-free chain after Lotte, is controlled by Lee Boo-jin, the eldest daughter of Samsung's ailing patriarch Lee Kun-hee.

Nine duty-free shops are in operation, and South Korea will open six more -- four in Seoul and one each in the southern port city of Busan and Gangwon province. The deadline for applications is slated for October 4.

Helped by big-spending Chinese tourists, sales of South Korean duty-free stores surged from 5.3 trillion won (5.2 billion US dollars) in 2011 to 9.19 trillion won in 2015. Despite concerns about oversupply, the Korea Customs Service has predicted that duty-free shops could attract 6.93 million clients in 2017.

Duty-free licenses have been coveted by major business groups including Lotte Group. In an earlier government assessment, Lotte managed to maintain its flagship store license in central Seoul but lost its  Lotte World Tower license to Doosan Group while SK Group lost its Seoul license to Shinsegae.

Aju News Lim Chang-won = cwlim34@ajunews.com

 
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