Chung Mong-kyu, Lee Bu-jin eye ‘world’s largest urban duty-free shops’ in Seoul

Chung Mong-kyu, Lee Bu-jin eye ‘world’s largest urban duty-free shops’ in Seoul. May. 26, 2015 07:20. salthj@donga.com.

A member of the extended Hyundai Group family and a member of Samsung Group family have joined hands to open a duty-free shop in Seoul’s city center.

Chung Mong-kyu, Chairman of Hyundai Development Co., and President Lee Bu-jin of Hotel Silla, who declared their joint venture in a surprise move last month, both appeared at a ceremony to inaugurate HDC Silla Duty Free Shop at Yongsan I-Park Mall in Seoul’s Yongsan district on Monday. HDC Silla Duty Free Shop is a joint venture that was formed through joint investment of 50-50 stakes by the two companies in their bid to acquire the right to operate a duty-free shop in Seoul, whose owner will be picked in July. The two companies appointed President Yang Chang-hoon of Hyundai I-Park Mall and Executive Vice President for General Operation Han In-gyu of Hotel Shilla as the co-heads of the new undertaking.

Monday’s ceremony started after President Lee visited Chairman Chung’s office on ninth floor at the mall and held 20-minute friendly talks. After the inaugural ceremony, the two entrepreneurs closely inspected stores at I-Park Mall, which will be housing the duty-free shop. According to HDC Silla Duty Free Shop, Chairman Chung visited the event site the previous day, and carefully inspected the background for their photo-taking and checked statement he would deliver at the inaugural ceremony.

The joint venture between the two persons is reportedly influenced significantly by friendship between Chung’s father, the late HDC Honorary Chairman Chung Se-young, and Lee’s father and Chairman Lee Kun-hee of Samsung Electronics. When Chairman Lee was hospitalized at a cancer center in Houston, the U.S. in 1999, then the Honorary Chairman Chung was also hospitalized at the same hospital, and the two families have engaged in exchange of friendship since. Since then, Honorary Chairman Chung participated at a Hoam Awards award ceremony, and Lee visited the funeral alter to pay respects to the late Chairman Chung when Chung died.

The two families have joined hands because they desperately need to secure the right to run a duty-free shop in Seoul’s city center. The combined annual sales at duty-free shops in Seoul amounted to 5.4 trillion won (4.95 billion US dollars), and that at duty free shops at airports amounted to 2.05 trillion won (1.88 billion dollars). The Korean government plans to grant permission to open three additional duty-free shops within Seoul’s city center this year for the first time in 15 years.

HDC Silla Duty Free Shop announced a plan to construct “DF (Duty Free) Land,” the world’s largest urban duty free shop complex. Duty free shops will take up a 27,400 sq. meters of the floor space amounting to a total of 65,000 sq. meters there, and house more than 400 brands. Chairman Chung said on the day, “Please focus your capacity on creating the world’s largest distinctive duty free shops that people would wish to revisit amid intensifying competition for general tourism and shopping facilities in Northeast Asia.” President Lee said, “I hope you make all-out efforts to contribute to galvanizing the local economy in Yongsan by making the most of your operational capacity and expertise in duty-free shopping business.”