Report: South Korea’s Lotte to exit China following North Korea test

South Korean conglomerate Lotte may be taking steps to withdraw from the Chinese market, following lagging sales and alleged economic retaliation from Beijing in response to South Korea’s decision to deploy U.S. missile defense on the peninsula.


Lotte, owner of the discount chain Lotte Mart, had been rumored to be completely shutting down its $7-billion operations in the world’s second-largest economy, or selling its assets to a prospective Thai buyer, the Charoen Pokphand Group in Bangkok, according to Yonhap.
That move is increasingly more likely after North Korea’s sixth nuclear test on Sept. 3 and the United States and South Korea completed installing four additional THAAD launchers on the peninsula.

THAAD is currently being deployed on a golf course that once belonged to Lotte.

Lotte Mart sells cheap-but-chic items, carries groceries, and appeals to middle-class consumers with upscale, trend-driven merchandise similar to Target and Kmart in the United States.

Lotte Mart’s parent company also operates 22 affiliates specializing in the production of snacks, beverages and chemicals, but their operations could also be susceptible to Chinese sanctions, according to the South Korean press report.

Sources at the company told Yonhap the group has reached out to U.S. investment bank Goldman Sachs to manage the sale of its China-based assets.

Sources said the decision came following North Korea’s sixth nuclear test, although Lotte chairman Shin Dong-bin had said there were no plans to withdraw from China.

Lotte’s tough decision, however, is being well received in financial markets, according to South Korean news service Money Today.

Sohn Yun-kyung, an analyst with SK Securities in Seoul, said the decision to withdraw, if finalized, would “reduce business uncertainty” for Lotte.

“At this point even if [Beijing-initiated] business suspension is stopped, it is difficult [for Lotte] to maintain stable operations in China,” Sohn told Money Today.

China may have suspended all online commerce for Lotte Mart in March, and dozens of Lotte Mart outlets remained closed because of the THAAD dispute.
By Elizabeth Shim