Name Value Pays Off... CJ Sweeps Up 100 Billion Won

Next Year Affiliate Brand Royalties
Projected at 107.6 Billion KRW... Up 14.4%
CJ CheilJedang Tops with Over 40 Billion KRW
Royalty Rate Relatively High at 0.4%

[Asia Economy Reporter Lim Hye-seon] CJ Group will receive over 100 billion KRW in 'CJ' brand fees from its affiliates next year. As affiliate sales increase, this is a 14.4% rise compared to 94 billion KRW this year.

According to the Financial Supervisory Service on the 20th, CJ plans to receive 107.6 billion KRW from its affiliates as brand usage fees throughout 2022. It will receive 40.029 billion KRW and 38.055 billion KRW respectively from major affiliates CJ CheilJedang and CJ Logistics. CJ ENM, CJ Olive Young, and CJ Freshway will be charged brand usage fees of 12.746 billion KRW, 8.651 billion KRW, and 8.122 billion KRW respectively.

According to CJ, the brand usage fee for each affiliate is set at 0.4% of the amount after subtracting advertising expenses from sales. Accordingly, CJ CheilJedang, with annual sales exceeding 24 trillion KRW, pays the highest trademark usage fee. Since the brand usage fee is based on sales, it must be paid even if an operating loss occurs.

CJ's brand usage fee rate is relatively high among domestic groups. SK, LG, GS, and Lotte Group have usage rates of 0.2%, while Hanwha Group and HiteJinro Holdings have 0.3%. Among food distribution companies, CJ receives the highest brand usage fees. A CJ official said, "The criteria for trademarks inevitably differ depending on the business of each group," adding, "We determine the brand usage fee rate at a reasonable level to fulfill a stable holding company role, including brand management and management consulting."

Lotte Group raised its brand usage fee rate for the first time in four years since the holding company was launched in 2017. Lotte Holdings will increase the brand usage fee rate charged to affiliates from 0.15% to 0.2% starting next year, citing an increase in brand value compared to 2017. This year, Lotte Holdings earned 85.538 billion KRW in trademark usage revenue from subsidiaries. The brand usage fees for seven major affiliates disclosed so far, including Lotte Chemical (39.4 billion KRW), Lotte Shopping (20 billion KRW), and Hotel Lotte (9 billion KRW), amount to about 89 billion KRW for next year. The total annual revenue is expected to be around 100 billion KRW. HiteJinro Holdings received 6 billion KRW in usage fees from HiteJinro this year.