Trump Meets Lotte Group Chairman Before His Trip to Louisiana
(Bloomberg) -- Showcasing his administration’s push to bring investments into the U.S., President Donald Trump hosted the chief of a South Korean conglomerate that has plowed $3.1 billion in a Louisiana chemical plant as part of its global expansion plan.
Shin Dong-bin, chairman of Lotte Group, which is recovering from a series of crises back home, met with Trump at the White House Monday.
Shin’s appearance with Trump marks a significant rebound for the retail-to-chemicals Korean giant, whose operations and ambitions have been hampered in the past couple of years by a graft scandal and geopolitical backlash in China. Shin himself was sentenced to a 30-month prison term, later suspended, for bribery and embezzlement. The completion of the ethylene factory, unveiled last week by Shin, marks a new chapter in the group’s recovery.
Lotte Group is emerging from a string of setbacks, including a feud between Shin and his older brother for control. In 2017, when the U.S. decided to deploy a missile shield on South Korean soil -- on a golf course owned by Lotte -- China retaliated economically, hindering operations of South Korean companies in China. Lotte was one of the hardest hit.
Focus on Profit
Amid those challenges, the conglomerate canceled a potential $4.5 billion IPO of a hotel unit and a bid for chemicals maker Axiall Corp. in 2016.
While Shin’s White House visit marks a comeback for the company, there are expectations the company won’t soon return to aggressive acquisitions.
“It is time for Lotte Group to ensure its internal stability rather than pursuing large M&As,” said Lee Sang-heon, an analyst at Hi Investment & Securities in Seoul. “It should focus on profitability.”
The Louisiana complex includes facilities with an annual capacity to make 1 million tons of ethylene, an ingredient used in plastics. That plant operates under a joint venture with Westlake Chemical Corp. and is set to start production this year. Lotte controls 88 percent of the partnership. It is also expected to result in the creation of 2,500 jobs in the state, according to Louisiana Economic Development. The investment merited a tweet from Trump.
The meeting with the South Korean executive also came at a time when Trump has been urging corporations -- both domestic and foreign -- to create jobs for Americans as the trade war with China escalated. His administration raised tariffs on $250 billion of imports from China to 25 percent last week, prompting the latter to retaliate.
Trump taped a video for the project’s unveiling that called the investment evidence of the strength of the alliance between the U.S. and South Korea, according to Lotte. Separately, Lotte said in a statement that it will boost investment in hotels in the U.S.
The U.S. isn’t the only country where Lotte Group is expanding. It is also increasing investments in Pakistan, Indonesia and Myanmar, starting with the food and retail businesses and then branching into chemicals and construction. Shin met with top Vietnamese officials in December and sought the nation’s support on Lotte’s projects there, including department stores, shopping malls, hotels and apartments.
Lotte Group, which had about $100 billion of assets as of 2017, had been under investigation since 2015 when a family feud over control of the group erupted into public view. Amid the rivalry between Shin Dong-bin and elder brother Shin Dong-joo, allegations of bribery and other corruption emerged, sparking a probe that was linked to the ouster of former South Korean President Park Geun-hye.
While Shin Dong-joo was acquitted, Shin Dong-bin and the group’s founder Shin Kyuk-ho were convicted. A court later freed Shin Dong-bin after suspending his 30-month sentence.
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