Lotte founder built empire in 2 lands, but wished to conquer steel

Posted on 20 January 2020

Source: Nikkei Asian Review

A Japanese business figure acquainted with Shin Kyuk-ho would never forget the look on his face as the Lotte group founder expressed regret about being unable to create an integrated steelmaker.

Shin, known as Takeo Shigemitsu in Japan, died Sunday at the age of 98 after building an empire that spanned candy, hotels, department stores and petrochemicals. Steel was one area that eluded the grasp of his chaebol, one of South Korea's family-run conglomerates.

But Shin had not consigned the idea to the realm of fantasy. In 1968, he visited President Shigeo Nagano of Japan's Fuji Steel -- a predecessor of Nippon Steel -- to seek technical assistance for such a move, according to the memoirs of a Japanese engineer involved in building steelworks for South Korean giant Posco.


Nagano, one of Japan's most powerful business leaders at the time, readily agreed, the engineer said.

Developing South Korea's steel industry was a monumental national-level project, as shown by the story of Posco, the company that ultimately managed it with heavy government support. Shin's dream of achieving this lofty goal single-handedly resonated with Nagano, who "adored off-the-wall ideas from eccentric people," according to the engineer's memoirs.

Lotte drew up a business plan with Fuji's support, but it never got off the ground.

Shin told those around him that he would never write about his life, and much remains unclear about the billionaire's early days.

During World War II, he moved from Ulju County in Japanese-occupied Korea to Tokyo, attending Waseda University. The war ended while Shin was in the midst of his studies.

In 1948, Shin set up a business manufacturing chewing gum, which was in high demand amid the American occupation. This was the origin of Lotte, which Shin named after the character Charlotte in the novel "The Sorrows of Young Werther" by Johann Wolfgang von Goethe.

Bold, unconventional marketing helped Shin's venture prevail in a market packed with 400 companies.

After earning his fortune in Japan, Shin expanded into South Korea in the 1960s, making what could be seen as a triumphant return to his homeland. The tycoon used his understanding of local tastes to make sweets for the South Korean market, and ultimately grew Lotte into the wide-ranging conglomerate it is today.

Amid this expansion, he set his sights on steel, regarded as the most vital resource to the nation's modernizing economy.

Shin reportedly never gave up this dream. When Hanbo Steel Industry went bankrupt in 1997 -- one of the triggers of the currency crisis that crippled South Korea's economy -- Shin expressed interest in buying it, said the Japanese business figure who knew him.

The Lotte founder alternated between Seoul and Tokyo each month, living as Shin Kyuk-ho in the former and Takeo Shigemitsu in the latter. His history as an immigrant from Korea may have intensified a desire to contribute to his home country.

The Samsung group and many other chaebol are transitioning from the second generation of their founding families to the third. Shin, who built a behemoth spanning two countries and boasting tens of billions of dollars in annual revenue, was the sole remaining member of the founders' generation.

Shin left the South Korean side of Lotte to younger son Shin Dong-bin and the Japanese operations to elder son Shin Dong-joo. But the patriarch was surely dismayed by the family feud over succession that erupted between the brothers in his final years, as his energy and health waned. 

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