SOUTH KOREA. Lotte Group, parent company of Lotte Duty Free, has created a joint venture with tax refund specialist Fintrax in a move aimed at encouraging tax free shopping among tourists visiting Korea.
Fintrax, a Eurazeo Capital portfolio company, has formed the joint venture with Lotte Group subsidiary Lotte Data Communications Corporation (LDCC). Fintrax will join Lotte as a shareholding partner in CubeRefund, an existing tax refund operator in Korea. It will use the name and logo of Fintrax subsidiary Premier Tax Free.
The joint venture partners stated their goal to “firmly establish CubeRefund as the leading VAT refund company in Korea”. Fintrax Group is the second largest tax free operator in the world with over 150,000 retail partner outlets.
The partners said in a statement: “This will contribute to the expansion of Lotte Group’s sales as well as the economy by increasing visits from overseas tourists through duty free shops, department stores and outlets in the mid to long term.”
According to Fintrax, the tax refund market in Korea has grown by almost ten times since 2010 from around KRW41.7 billion (US$36 million) to KRW413 billion (US$362 million) today. It is expected to expand in line with the continued growth of overseas tourists. “Tax free shopping is a fundamental part of the government strategy to attract Chinese and other international tourists,” noted the partners.
Through CubeRefund the partners plan to promote international joint marketing, increasing the luxury goods tax refund business, as well as “establishing a bridgehead for overseas market entry”.
Fintrax CEO Patrick Waldron said: “We are delighted to invest in this joint venture with CubeRefund. We have a great partner in the Lotte Group, one of Asia’s leading companies. This latest investment underpins our commitment to Asia as a growth strategy for our group.”
Waldron will be joined on the board of the JV company by Gary Byrne, Head of New Markets at Fintrax, who leads the Asian strategy and led the deal on behalf of Fintrax. Byrne added: “We are pleased to begin our operations in Korea, increasingly an important market for our international brands.”
“CubeRefund is the first successful case to attract foreign investment as an excellent venture company discovered by LDCC,” said LDCC CEO Ma Yong-deuk. “We will continue to explore various win-wins. I will take the lead in spreading the culture of mutual growth.”
Fintrax was advised on the deal by Natixis and LDCC by PWC Korea.