Lotte founder showed how Japan and South Korea can work together

Shin Kyuk-ho tried to calm historical antagonism between the countries

Shin proved cooperation between the two countries could work. (Courtesy of Lotte Group)

On January 19, Shin Kyuk-ho, the founder of the Korean candy-to-chemicals conglomerate Lotte Group, passed away at the age of 98. He was a successful businessman who built his enterprise in both Japan and Korea, a self-made man who created his legacy with his own bare hands.

He left behind a business that bridged the two countries, which are currently at odds amid bilateral relations worsened by their painful histories. His diligence and insight set a milestone even for today’s entrepreneurs to follow, and he broke barriers in both Korea and Japan. Other entrepreneurs would do well to take note.

His start in business was difficult. After moving from Japanese-occupied Korea to Japan at the age of 20, he experienced discrimination and prejudice, struggling every day as he balanced work and study. He delivered milk and newspapers before going to lectures. To earn the trust of the locals, punctuality was essential. Rain or shine, he always made his deliveries on time.

Having witnessed Shin’s persistence and integrity, a pawnshop owner suggested that he start a business of his own and lent him 60,000 yen. Considering that the average monthly salary at the time was 80 to 100 yen, it was an enormous investment. However, Shin’s lubricant factory was bombed shortly after opening in 1944.

Giving up was not an option. He saved money to start a business again, and his efforts paid off in 1946 with Hikari Special Chemical Research. There, he achieved tremendous success. Having studied chemistry as an undergraduate, Shin was involved in almost every stage of manufacturing. His dedication to detail in the retail experience boosted sales and was critical in expanding Lotte’s business.

After paying off all his debts, Shin established Lotte Corporation in 1948, and by the 1960s he had become one of the most prosperous entrepreneurs in Japan, a success highly unexpected for a foreigner.

At the time, Korea was in grave need of successful entrepreneurship and a modern corporate culture it could adopt. When diplomatic relations between Korea and Japan were normalized in 1967, Shin responded to that need. He brought his corporate know-how from Japan and successfully implemented in Korea his methods of trust and efficiency.

Korea was not an easy place to do business then. It was still a developing country and had almost no foundation for industrial development. The very fact that he entered the Korean market as soon as he could shows not only his insight in recognizing opportunity, but also his longing for and love of the country.

His love for Korea was clearly demonstrated during the Asian financial crisis in 1997. He personally released $20 million into the market and into social funds to help revive the economy. In addition, he provided $500 million through Lotte.

Lotte is now far more successful in Korea than it is in Japan, with most of its profits coming from the peninsula. The number of employees Lotte has in Korea is nearly 30 times the number it has in Japan. Shin’s passion for his home country blossomed as he created businesses, jobs, and opportunities in Korea.

He was not afraid to take risks and, when it came to Korea, he was at once nostalgic and fierce.

Trust was the foundation of his corporate culture, a way to overcome the barrier of nationality. It became his crucial weapon in distinguishing himself from others when he entered the Korean market.

He contributed to the advancement of Korean corporate culture by practicing in Korea the same business method he used in Japan—maintaining and strengthening trust. He avoided debt and pursued stability. The business sectors he entered generated long-term profits and soon became a model for other enterprises in Korea.

It is undeniable that he and Lotte faced legal troubles related to taxes and corporate governance, and that he was convicted of embezzlement and breach of duty in 2018, avoiding prison because of his age.

Even though Korea often demonizes and harshly punishes chaebol, or family-owned conglomerates, under excessively strict corporate laws, Shin managed to promote an image of good and trustworthy entrepreneurship throughout his work at Lotte.

Shin proved that cooperation between the two countries could work and indeed held the potential for mutual benefit. He was a bridge, a figure who shaped a distinctive and remarkable corporate culture. As time passes, the significance of these two countries working together becomes ever clearer.

There are antagonistic views between Japan and South Korea that are difficult to erase for historical reasons. Nevertheless, Shin showed that business grounded in trust could provide a channel for communication and mutual benefit.

He is a monument to those who seek a way to collaborate in business. Shin Kyuk-ho is a name to be remembered as a bridge of trust for his generation and those to come.

Sung-no Choi is President of the Center for Free Enterprise, Korea.

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Original title: Lotte Group founder showed Japan and South Korea how to work together

Author: Sung-no Choi

Date: 2020-02-04

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=press&pn=22&idx=22357