S. Korea's Lotte completes 100% CTA Makro takeover
Updated: 2008-06-11 11:36
One of the oldest and most well-known names in Beijing's retail sector is about to disappear as Lotte, the South Korean conglomerate, completes its 1.28 billion yuan ($184.73 million) takeover of CTA Makro.
South Korea's biggest retailer purchased 100 percent of CTA Makro, which operates six supermarkets in Beijing and two in Tianjin, under the Chinese brand name Wankelong.
Lotte intends to rename all of Makro's outlets placing all supermarkets under the Lotte Mart brand name.
It plans to open its first outlet in China in a suburb of Beijing on June 18 and will rename Wankelong supermarkets in Sidaokou and Chongwenmen at the same time while renovation of other Wankelong outlets will begin early next year.
CTA Makro, a joint-venture company, was a pioneer in the cash-and-carry business in Beijing. The company was established jointly by Dutch SHV Holdings and China National Cereals, Oils and Foodstuffs Import and Export Corporation (COFCO), a State-owned group with businesses ranging from food and real estate to retail, hotel and financial services. It opened its first Wankelong supermarket in Beijing in 1997.
Wankelong became a well established local brand, popular among shoppers in the capital.
In December, Lotte Shopping Co Ltd, Lotte's hypermarket arm, said it had reached an agreement to acquire CTA Makro in stages. The acquisition "is part of Lotte's VRICs (Vietnam, Russia, India and China) strategy," said Park Jong-doo, general manager of Lotte Mart in China. "China will account for 80 percent to 90 percent of the revenue of the VRICs global strategy," he said at a news conference yesterday.
The Lotte group has 17 companies in China, four in Vietnam and three in India.
The group is aiming to have 20 outlets in Beijing, but is also seeking to expand its business to Shandong, Liaoning and other provinces. It plans to open 300 hypermarkets in China over the next 10 years, competing head-to-head with Western retail giants like Carrefour, Wal-Mart and Metro.
Before the acquisition, CTA Makro targeted the wholesale market. It provided wholesale to professional customers - mainly dealing with large packed products. Now under the Lotte brand, the supermarkets will need to consider the demands of numerous individual retail customers, General Manager of Lotte Mart Park Jung-sik said.
Lotte will reorganize its products and aims to provide a wider range of merchandise while improving the quality of service. It plans to focus on the daily necessity merchandise sector, where Lotte will provide own-brand products.