Lotte 2025 Second Half VCM (Formerly Presidents' Meeting)
Heavy Sense of Responsibility Demanded from Group CEOs
First-Ever Two-Day, One-Night Meeting in Response to Internal and External Uncertainties
Call for Restoring Fundamental Competitiveness to Overcome Management Challenges
Urges Establishment of a Challenging Organizational Culture and Active Use of AI
"The most fatal mistake in corporate management is either turning a blind eye to problems you are aware of, or failing to recognize them as problems in the first place. A CEO must anticipate changes in the business environment five or ten years down the road, and plan for what needs to be done both now and three years from now."
Shin Dongbin, Chairman of Lotte Group, criticized the passive attitude of key affiliate CEOs and called for strong reforms, saying, "In an era of rapid change, failing to adapt is dangerous," at the 2025 second half Lotte VCM (Value Creation Meeting, formerly the Presidents' Meeting) held at the Lotte Human Resources Development Institute Osan Campus on July 16-17. He also presented the management policies that CEOs must implement in the second half of the year to restore the group's fundamental competitiveness, including enhancing brand value, accelerating the implementation of strategies by business unit, and improving productivity.
The meeting, presided over by Chairman Shin, was attended by more than 80 people, including his eldest son Shin Yooyeol, Executive Vice President and Head of Future Growth at Lotte Holdings, the CEO and division heads of Lotte Holdings, heads of business groups, and affiliate CEOs. Chairman Shin gave a sober assessment of the group's performance in the first half of the year and requested that all CEOs "approach their work with a strong sense of responsibility."
The Lotte VCM is held twice a year, in January (first half) and July (second half). The first half meeting reviews the previous year's management performance and shares the management goals for the current year. The second half meeting reviews the first half's performance and shares detailed policies for achieving goals in the latter half of the year.
While the Lotte VCM has traditionally been a one-day event, this time it was unusually held over two days. This is the first time the VCM has been conducted as a two-day, one-night event. This reflects a heightened sense of crisis regarding the significant uncertainty in the internal and external business environment, and the meeting reportedly maintained a consistently serious and heavy atmosphere throughout.
Previously, after rumors of a liquidity crisis surrounding the group surfaced at the end of last year, Chairman Shin emphasized in his New Year's address that "even stronger reforms are needed to meet market expectations." At the first half VCM, he urged, "The group must utilize its assets efficiently through 'selection and concentration,' overcome the current challenges, and use this as a turning point for major innovation." Nevertheless, he judged that the reform measures being implemented by major group companies remain insufficient, and he called on the presidents to demonstrate foresight and respond swiftly to future challenges.
Shin Dongbin, Chairman of Lotte Group, is speaking at the 2025 second half VCM (Value Creation Meeting, formerly the Presidents' Meeting) held at the Lotte Human Resources Development Institute Osan Campus. Photo by Lotte Group
Chairman Shin also demanded that the strategies being pursued by each business group be accelerated and presented specific tasks. In particular, he called for rapid business restructuring in the chemical group, including Lotte Chemical, Lotte Fine Chemical, and Lotte Energy Materials. This appears to be in consideration of the fact that Lotte Chemical, which has served as a cash cow for the group, has posted losses for six consecutive quarters due to the global petrochemical industry's downturn. Previously, at the end of last month, three credit rating agencies downgraded Lotte Chemical's credit rating, and as a result, Lotte Holdings' rating was also downgraded.
Lotte Chemical is currently undergoing an overall business restructuring. This year, it has sold or liquidated its high-purity terephthalic acid production and sales subsidiary in Pakistan, its subsidiary in Indonesia, and its stake in Japanese materials company Resonac. To further restructure non-core businesses, it recently decided to sell its water treatment business located in the Daegu National Water Industry Cluster.
For the food group, including Lotte Wellfood, Lotte Chilsung Beverage, and Lotte GRS, Chairman Shin emphasized strengthening the brands of core products. He stated, "The brand is the foundation of our business competitiveness and an important value we have accumulated over a long period." In addition, he asked the retail group?including department stores, marts and supermarkets, e-commerce, and home shopping?to consider ways to meet the diverse needs of customers.
As a specific strategy, he also highlighted the importance of management from a 'PEST' perspective. PEST is a tool for analyzing a company's external environment, focusing on Political, Economic, Social, and Technological factors, and is used to assess how macro-environmental factors affect business. He also stressed that, to improve productivity, employees' job expertise must be strengthened and a performance-based HR system should be established. Furthermore, he encouraged the active use of artificial intelligence (AI) to foster a more challenging organizational culture and improve work efficiency.
Chairman Shin said, "The business environment is constantly changing, presenting us with both risks and opportunities," and called for proactive management. He added, "Not even attempting is the same as failure. I urge everyone to continuously pursue innovation in our core businesses and to take the lead with me for the future of the group."
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