Business | 10 Lotte stores closed in China amid political tension
A Lotte Mart is closed in Hangzhou, Zhejiang province. Photo: Reuters
A Lotte Mart is closed in Hangzhou, Zhejiang province. Photo: Reuters

10 Lotte stores closed in China amid political tension

Chinese officials shut retail outlets of Korean stores after inspections, as Seoul protests discrimination against the giant over US THAAD-defence land deal

March 6, 2017 5:07 PM (UTC+8)

South Korea’s Lotte Group on Monday said more than 10 of its Chinese retail stores have been closed after inspections by authorities, as Seoul protests discrimination against the conglomerate in China after it provided land for a US missile defence system.

The closures include two stores around the city of Dandong on the North Korean border, said a spokesman for Lotte Mart. The unit had 115 stores in China as of January contributing to group sales there of over 3 trillion won (US$2.6 billion) in 2015.

The spokesman could not provide further details, but employees at the two Dandong outlets told Reuters on condition of anonymity that the closures were fire-safety related. One of the stores was expected to reopen in a week and the second on April 1, the people said.

Reuters could not immediately reach local fire safety authorities for comment.

The closures are the latest in a series of incidents affecting South Korean companies in China after cyberattacks and a ban on sales of travel tours to South Korea.

The incidents come after Lotte International Co Ltd approved a land swap outside Seoul last week that will allow South Korea to install the US Terminal High Altitude Area Defense (THAAD) system, in response to missile threat from North Korea.

South Korea’s military earlier on Monday said North Korea fired “multiple ballistic missiles” into the sea prompting acting president Hwang Kyo-ahn to call for THAAD’s swift installation.

But China’s government has objected to the deployment of THAAD, saying it has a radar capable of penetrating its territory, while state media has called for a boycott of South Korean goods and services.

Protests outside Lotte stores

On Chinese social media on Monday, photos and videos circulated of protests outside Lotte stores, while others showed Lotte outlets with their steel grates pulled shut.

Outside one store, a red banner with large white characters read: “South Korea’s Lotte has declared war on China. Lotte supports THAAD. Get the hell out of China.”

Dozens of people holding Chairman Mao posters protested in China’s Jilin province on Sunday, calling for a boycott of South Korean goods as part of a backlash against the country’s Lotte Group.

“No to THAAD! Boycott Korean goods!” chanted the protesters in northern Jilin province.

“Patriotism starts with me! Long live the Communist Party!”

This US Department of Defense/Missile Defense Agency handout photo shows two THAAD interceptors and a Standard-Missile 3 Block IA missile were launched resulting in the intercept of two near-simultaneous medium-range ballistic missile targets during designated Flight Test Operational-01 (FTO-01) on September 10, 2013 in the vicinity of the US.Army Kwajalein Atoll/ Reagan Test Site and surrounding areas in the western Pacific. The test demonstrated the ability of the Aegis BMD and THAA / AFP PHOTO / DoD / Handout / AFP PHOTO / DoD / Missile Defense Agency" - NO MARKETING NO ADVERTISING CAMPAIGNS - DISTRIBUTED AS A SERVICE TO CLIENTS
Two THAAD interceptors and a Standard-Missile 3 Block IA missile is launched. Photo: AFP/Department of Defence

The protests come days after Lotte Duty Free on Thursday said a cyberattack using Chinese internet protocol (IP) addresses had crashed its website. It is now back online.

The Lotte Group in a statement on Sunday said it was seeking assistance from the South Korean government regarding the issues it was facing in China, its biggest market where it employs around 20,000 people – a third of its overseas staff.

On Monday, shares in Lotte Shopping Co Ltd, of which Lotte Mart is a business division, fell as much as 4% compared with a near-flat benchmark share price index.

Lotte’s troubles expanded to South Korea last Thursday as China;s tourism ministry instructed tour operators in Beijing to stop selling trips to South Korea from March 15.

The order has since spread to other regions across the mainland, an official at Korea Tourism Organization said on Monday.

One Chinese company cancelled its plan to send some 5,000 employees to South Korea’s Incheon city in April, the official said, adding there were concerns about more such cancellations.

China also cancelled its invitation on Friday for South Korea’s trade minister Joo Hyung-hwan to attend its annual Boao forum, the ministry said on Monday. The forum’s office cited a lack of panels for a session to which Joo was invited, the ministry said, without elaborating.

On Sunday, Joo expressed “deep concerns over a series of actions in China” and protested against discriminating action by China towards South Korean companies.

“We will act accordingly to international law against any actions that violate policies of the World Trade Organization or the free trade agreement between South Korea and China,” he said.

China has repeatedly denounced THAAD as a threat to its security, with a foreign ministry spokesman saying “the consequences entailed will be borne by the US and the Republic of Korea.”

Calls are growing in China for Beijing to use the carrot and stick of its huge market to raise pressure on South Korea to abandon the THAAD plan.

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