Interview: Hotel Shilla Travel Retail President Ingyu Han spells out significance of Hainan alliance 

CHINA/SOUTH KOREA. Ingyu Han, President of Hotel Shilla Co’s travel retail business, has emphasised the importance of the company’s move into the Hainan offshore duty free sector with Hainan Tourism Investment Duty Free Co (HTDF), announced last week.

As reported, the two companies signed a far-reaching MOU for a strategic cooperation agreement designed to culminate in a joint venture [As noted in our original story, HTDF said that its existing cooperation relationships are not afffected by the Shilla MOU].

According to the MOU, HTDF and Shilla will carry out a “comprehensive and multi-level strategic cooperation” across several areas including product development and sourcing, brand incubation, human resources & staff training.

The companies will “deeply integrate” their activities, develop synergies, and jointly develop Hainan and overseas duty free markets.

Han told The Moodie Davitt Report: “Hotel Shilla has actively studied and implemented an overseas expansion strategy for a long time.

“I think it is crucial for our survival and growth due to overly escalated competition in the Korean duty free market. As part of this strategy, Shilla successfully entered overseas airport operations, including Singapore and Hong Kong.

“Taking the format of a JV, the addition of downtown duty free will enhance the business portfolio of Shilla’s overseas expansion strategy as it was heavily relying on airport concessions. Furthermore, Hainan is a key travel retail location of the future with enormous potential, so Shilla deems this JV as a good opportunity.”

Han said that the company would maintain its tradition of championing Korean brands and helping them grow internationally. “You must be familiar with Shilla’s effort to introduce Korean brands with high potential when entering overseas markets. This case will echo that approach,” he said.

“My partner [HTDF] especially wishes to attract not only already successful Korean brands but also diverse rising K-fashion brands. So Shilla will actively incubate and introduce Korean brands in Hainan.”

Another traditionally strong suit for Hotel Shilla subsidiary The Shilla Duty Free is digital, both in terms of communication and commerce. Does the company also plan to bring that capacity to the Hainan partnership?

“Of course,” Han replied. “Shilla has a long history of investment in the digital-based ecosystem, encompassing online commerce, digital marketing and customer data management. And I am proud to say that Shilla is definitely one of the top digital players.

“No-one can deny that travel retail will not be the same in the post-COVID era, exemplified by a drastic change of trend and the rising importance of digital platforms oriented to the MZ generation.

“Collaboration across a wide spectrum is mentioned in the MOU to utilise Shilla’s know-how and experience. Shilla will discuss an extensive and in-depth collaboration plan, utilising or transplanting its digital platform and operations system,” Han commented.

Summing up the Hainan partnership’s potential, Han concluded: “I think it is a good opportunity for both HTDF and Shilla to form a strategic alliance through this MOU and it has important significance.

“We will make great efforts to create the best synergy through cooperation between HTDF – which has successfully entered Hainan – and Shilla, which has wide brand networks and an advanced operating system.”