HO CHI MINH CITY — When Lotte Group entered Vietnam in July 1996, it bet on hamburgers. Having built its success in South Korea as a food company, the group was confident it could win over local palates in Vietnam as well. Lotte GRS, the affiliate that set up the local entity, opened the first Lotteria outlet in Ho Chi Minh City two years later. The start was not easy. KFC, the U.S. fast-food chain, had already taken the prime commercial districts, and Jollibee of the Philippines, which entered in 1997, was expanding its footprint.
Lotte GRS found its breakthrough in localization. Reflecting a food culture built on rice as a staple, the company rolled out specialized items such as rice-based menus to court local tastes. On that foundation, it posted its first operating profit in 2017, 19 years after entering the market. It now runs 270 outlets across Vietnam and holds the top share of the country's hamburger market.
After hamburgers made the Lotte name known, affiliates followed one after another. Lotte Mart, Lotte Culture Works and Lotte Global Logistics entered in 2008, followed by Lotte Hotel in 2013 and Lotte Department Store in 2014. The group later expanded into duty-free, construction, chemicals and IT, taking a business that began in food through retail, tourism and services and into industrial infrastructure more broadly.
Thorough localization remained the core strategy throughout. Lotte Mart, which opened its first store at South Saigon in Ho Chi Minh City in 2008, noted that local residents rarely cook at home and strengthened food offerings such as its Yorihada Kitchen prepared-meal line. It also responded to concerns about the freshness of Vietnamese food products by promoting its own fresh-food brand, FRESH 365, which drew a strong response.
Lotte Global Logistics backed that up by building local distribution networks, including cold chain facilities, to ensure stable delivery of Lotte Mart's fresh products. The Vietnamese unit of Lotte Mart, which now operates 17 stores, turned profitable in 2022 and has grown steadily since, posting revenue of 426.6 billion won ($290 million) and operating profit of 40.5 billion won ($27.5 million) last year.
Lotte brought the full weight of its Vietnamese operations together in 2023 with the opening of Lotte Mall West Lake Hanoi. The complex gathers a shopping mall, a hypermarket, a hotel, a cinema and an aquarium on a site of about 354,000 square meters. It marks an overseas version of Lotte Town, the group's domestic mixed-use development model that pools the capabilities of individual affiliates to put shopping, lodging, dining and leisure in a single space. Lotte Mall West Lake Hanoi has established itself as one of Vietnam's leading mixed-use shopping complexes and is close to surpassing 1 trillion won in cumulative revenue.
Lotte Group is also widening its reach into urban development in Vietnam. The Lotte Eco Smart City Thu Thiem project underway in Ho Chi Minh City is the prime example. The mega-project, worth a total of 3 trillion won, is a mixed-use development of up to 60 stories that will build a financial center, a shopping mall, a hotel, offices and housing on a site of about 74,000 square meters near the Saigon River in Ho Chi Minh City. Following a groundbreaking ceremony in 2022, the project cleared administrative procedures and received a construction permit in June this year.
Lotte Group's Vietnamese business, which began with hamburgers 30 years ago, was able to stretch from shopping, dining, lodging and leisure into housing, urban development, logistics and IT thanks to the foresight of Lotte Group Chairman Dong-bin Shin. The chairman identified Vietnam early on as a core overseas market for the group, a country of more than 100 million people where the consumer market is expanding rapidly on economic growth and rising incomes. Across all affiliates, the group put the emphasis on building brand trust and a business base locally rather than on short-term profitability, continuing to invest even while absorbing early losses.
Shin has been particularly active in Vietnam since the COVID-19 pandemic, visiting repeatedly to oversee the business himself. He attended the Eco Smart City Thu Thiem groundbreaking in 2022 and the opening of Lotte Mall West Lake Hanoi in 2023, and he chose Lotte Mall West Lake Hanoi as the first overseas site he visited for on-site management this year. "Vietnam is a core country in the group's global business," Shin said. "I ask you to strengthen the competitiveness of our existing food and retail businesses while also working to pioneer new businesses such as advanced city construction, eco-friendly materials and advanced logistics."
Lotte Group plans to go beyond widening its business areas and strengthen a strategy of growing together with the local industrial ecosystem. To that end, it employs more than 10,000 local workers in Vietnam, established Lotte Ventures Vietnam in 2021 and launched L-Camp Vietnam, a local startup incubation program, in May this year.
"We plan to continue strengthening the market competitiveness of our core local businesses and expand new businesses such as urban development and logistics to broaden the base for growing together with Vietnam," a Lotte Group official said.