Japanese children's apparel retailer Narumiya International Co is to embark on a joint venture with Lotte Trading Co to expand into the South Korean market.

As part of the venture, Narumiya will open a retail outlet in Lotte Department Store Co's flagship location in Seoul.

The store, to cover about 170 square metres of floor space, will be managed by Lotte, with Narumiya to supply merchandise and provide salesperson training.

Although merchandise will be about 30 per cent more expensive than in Japan because of import costs, the two companies have set a sales goal of US$7.5 million for the store's first 12 months of operation.

The decision to open further stores in South Korea will be based on the success of the initial outlet.