oint venture to make chocolate in China, the companies said in a statement Monday. Lotte will own a 51 percent stake in the joint venture, to be operated in Shanghai but headquartered in Hong Kong, according to the joint statement released by Lotte.
The venture will produce chocolate at a factory in Shanghai that Lotte bought in September last year for US$20 million (euro15.5 million) from a local company, is scheduled to start production in August, Lotte and Hershey said.
"Through this alliance, we hope to grab in advance a portion of the Chinese chocolate market, which is expected to grow quickly in line with (China's) expanding economy," the companies said.
Lotte is South Korea's largest confectionery company. Hershey, Pennsylvania-based Hershey, the largest U.S. candy maker, manufactures chocolate brands such as Kisses, Reese's and Hershey's.
Lotte and Hershey said that the chocolate products market in China is currently estimated to be worth 600 billion won (US$639 million; euro495 million), without specifying whether that was an annual figure.
Hershey's products are widely sold in China, although they are relatively expensive for local tastes and so mainly sold at top tier stores.
The Shanghai region is considered to be the most lucrative for confectioners selling in China, given the local taste for sweets and the relatively strong spending power of consumers.
In addition, the companies said that Lotte will use a Hershey distribution channel in the United States to sell its chewing gum products beginning in March.
