Korea's Lotte to buy China TV shopping network

Dept. store operator will take majority stake in Lucky Pai

BEIJING -- South Korea's largest department store operator, Lotte Group, plans to acquire a 63% stake in China's No. 3 on-air shopping channel, Lucky Pai. 

“We plan to buy Lucky Pai soon which will give us more opportunity to expand our retail business into corners of China,” a Lotte Group official told The Korea Morning Herald on Wednesday.

China's TV home shopping industry has strong potential, realizing sales revenue of 10.57 billion yuan ($1.5 billion) in 2008, a 51.2% rise year-on-year. That figure accounted for a mere 0.8% of the country's general retail sales, according to Beijing-based research firm Analysys International.

Lucky Pai, a home-shopping network based in coastal Shandong Province, hawks jewelry and electronics to millions of Chinese households was started in 2007 with backing from Lightspeed Venture Partners of Silicon Valley, then followed by co-investors Intel Capital and DT Capital of Shanghai.

The firm is reported to have gone from zero to $18 million that first year. Today, Lucky Pai's website claims it has 1.2 million members and says the company is the only TV shopping channel in Shandong province approved by the State Administration of Radio Film and Television.

Lotte's move to buy Lucky Pai comes as China's government at once cracks down on false advertising on television and encourages the dozens of Chinese TV stations with home shopping businesses to expand onto the Internet and mobile phones.

Well-wired South Korea is in a position to teach Chinese consumers a thing or two about cross platform retailing.  Shanghai Oriental CJ Company, a joint venture between Shanghai Media Group and South Korea's CJ Home Shopping Company, started in Apr. 2004. It was expected to report revenues of 2.8 billion yuan ($409 million) in 2009.

Other major players in China's home shopping space include top-ranked online vendor Taobao.com, which in Dec. said it would form a joint venture home shopping channel with Hunan Satellite TV.

By comparison, U.S TV shopping giant QVC reported revenues of $1.8 billion for the second quarter of 2010, according to results reported by its parent company, Liberty Media.