In few days, the current year will be passed, and a new year will come. We would like to express our gratitude to all of our employees who have helped each other get through these difficult times.
2020 was an exceptionally difficult year for us. Due to the COVID-19 pandemic that will definitely leave a mark in world history, air traffic has been blocked and duty-free industry faced unprecedented difficulties. Yet the end of these hardships still feels out of reach. The pain of the present cannot be compared to the glory that the future will bring us. It has been a difficult year, but now is the time to look forward to a promising tomorrow.
In 2021, we need to examine ourselves to see if we neglected any parts of compliance or ethical management. It's time to reflect on whether we have allowed minor irregularities or expediency due to the COVID-19 pandemic.
We ask that all of you not only to have an accurate understanding of relevant laws and regulations, but also to have compliance to it and make an active effort in becoming leading agents in establishing a transparent corporate culture.
Thank you for your hard work this year. Thank you.
CEO of LOTTE DUTY FREE
The COVID-19 pandemic that has swept the world is unlikely to end easily. The duty-free industry is facing greater challenges than any other industry given that the number of domestic and foreign travelers has plummeted. However, despite this crisis, we continue to take on new challenges selling duty-free products domestically, opening smart stores, and venturing into live commerce.
Unpredictable crises like the COVID-19 pandemic can reoccur at any time. Changes in technology also make it more difficult to predict the future. Now is the time when one needs the ability to quickly change and adapt to stay one step ahead of others. Organizations that are sensitive to change must acknowledge the differences and be built on empathy, consideration, and communication. If we add common goals, sharing, and fairness in achieving good performances, we can get one step closer to the sustainable management.
First step to such change is compliance. Compliance includes following laws and transparency in decision-making. It is to build a community based on trust by communicating with others while respecting different opinions, being mindful of principles, and securing the unique distinctive competitiveness of our company that allows us to stand firm without being shaken by uncertainty.
LOTTE DUTY FREE's vision is to reach "Travel Retail Global No. 1." This cannot be achieved without growing together with our multiple partners. Let's help LOTTE DUTY FREE stores to grow mutual recognition, empathy, ethical management, and compliance management. Thank you.
CEO of LOTTE DUTY FREE
The world is currently going through a difficult time due to COVID-19. The health of people around the world is compromised, and concerns about a global economic downturn are on the rise.
LOTTE DUTY FREE is expected to lose operating profit, as it was the case during the MERS outbreak. Now, for the sustainable development of LOTTE DUTY FREE, the CEO, executives, and employees must work hard and share this burden.
Even in these circumstances, there is something we must not forget. It is compliance. We should spare no effort to secure internal soundness through compliance and to build customer trust. Our great strength that helped us overcome the difficulties of the MERS and THAAD incidents in the past and reaching this present position is due to the strong trust we have built with stakeholders through steady compliance activities. In the past, corporate and social practices were focused on short-term financial performance and considered compliance as an unnecessary expense. However, considering the astronomical amount of money and effort required to restore customer trust, we should start thinking of it as an investment rather than a cost.
Our mission is "to contribute to humanity by creating value throughout the customer's life." As the first step toward putting social responsibility into practice, we should focus more on internal compliance at the level of our corporate culture. In May, LOTTE DUTY FREE was selected as a company with an excellent CP and participated in the CP implementation case presentation by the Fair Trade Commission. At the event, we shared our vision of compliance and provided some recommendations to multiple corporate stakeholders interested in adopting a CP. As we gained the reputation, it is time for all executives and employees to assume greater responsibility and work hard to establish mature, ethical, and law-abiding management.
We would like to, once again, ask all our employees to work together to make compliance a representative feature of LOTTE DUTY FREE's corporate culture. Thank you.
CEO of LOTTE DUTY FREE
The hard work of the previous year has been rewarded. We became the first duty-free business to obtain an "A" grade in the CP rating evaluation. I believe that this was possible because of the efforts of all our employees who have, since the introduction of CP in 2014, worked really hard to establish a fair and ethical management culture.
This year, LOTTE DUTY FREE celebrates its 40th anniversary. Since 1981 when this business started, our sales grew more than 5,000 times in the last 40 years from KRW two billion in the first year to KRW ten trillion last year. We became number one travel retailer in Korea, as well as the second in the global market. This was possible because of the passion of our senior and junior members, who have worked together with dignity in the face of difficulties.
However, the circumstances are changing daily, and the growth story of the past and the size of the company can no longer guarantee sustainable growth. Seeing how many companies have lost the trust of their customers through trivial expediency or complacency, we should thoroughly re-examine the factors that have contributed to our success in our past 40 years.
In particular, the demands from various stakeholders for corporate social responsibility are increasing. It is time to internalize the concept of the global citizenship so that all employees can exert a positive influence beyond the quantitative growth. As an executive or employee of the no. 1 company in the duty-free industry, we ask that you not only strictly comply with laws but also listen to the voices of stakeholders as well as customers and business partners.
CEO of LOTTE DUTY FREE
I'm sure you've heard of the story of Hans Brinker, a Dutch boy who saves his village by putting his finger in a leaking dike. The boy saw the leaking dike and first put his finger in, then his fist, then his entire body to save his village.
The moral of the story stands strong even today. First, the story shows that early intervention can prevent a great danger with a small effort. Because the boy spotted the small hole and took action, he was able to stop the dike from collapsing even with his petite body. If the hole went unnoticed or overlooked until it was too late, he wouldn't have prevented the collapse by himself, potentially leading to irreversible harm to the village..
Another lesson is the significance of not underestimating an individual's influence within an organization. We often undervalue the impact of each individual in our organization because their contribution is not readily acknowledged.
If such a tendency prevails within an organization, it can give rise to two detrimental attitudes: complacency, where individuals may ask themselves, "Will my misconduct truly jeopardize the company?" and passivity, where they may question, "Will my efforts genuinely impact the company's success?" In the long run, this can pose challenges in effective risk management and impede the organization's growth. Much like the young boy who rescued the entire village, we should take to heart the lesson that each of us holds the potential to wield positive influence.
Lately, corporate management has broadened the scope of compliance, extending it beyond legal obligations like anti-corruption and fair trade to encompass corporate ethics. This extended perspective goes beyond passive adherence to mandated norms and principles; it involves building a trust-based community through proactive communication with diverse stakeholders and respecting their opinions.
To achieve this goal, all Lotte Duty Free employees must collectively embrace the concept of ethical management. I strongly encourage each of you to actively commit to ethical management in your repective roles, thus solidifying compliance as an integral part of our corporate culture, rather than a mere slogan. Thank you.
Thanks you all the years we have worked together for supporting LOTTE DUTY FREE go beyond Korean product, brand, and service markets and become the top duty-free retailer leading Asia. After adopting the Fair Trade Compliance Program in 2014, LOTTE DUTY FREE develops a code of ethics and helps employees implement the code correctly to build and strengthen trust with customers and partners. These positive forces push LOTTE DUTY FREE toward a healthy corporate culture based on fair trade principles.
Today, having a transparent and ethical culture is no longer an option but a requirement for survival. Only companies fulfilling their social responsibilities through ethical practices can stay ahead of competition and earn loyalty from customers and stakeholders. Understanding and participation of all employees including the CEO and the Compliance Director is the key to maintain an ethical business environment. In addition to having a strong ethic, applying the work ethic to daily life is pathway to foster a strong ethical culture. I hope every employee of LOTTE DUTY FREE support the improvement of the company’s ethical climate. The doors of the Compliance Director’s Office are always open. Thank you very much.
Employees should understand that implementation of fair trade and mutual growth with partners are key factors that give the company a competitive edge stay competitive and try not to engage in any unfair or unjust activities.
Employees should tighten the compliance monitoring, auditing, and reporting system under the supervision of the Fair Trade Compliance Director.
Employees should participate in educational programs for improving their understanding on fair trade.