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Lotte Mart, which has faced business suspensions and other forms of retaliation over the THAAD issue, has begun selling off its stores in China, it was recently confirmed. According to accounts on Sept. 14 from Lotte and local investment banks in China, the Lotte Group recently selected Goldman Sachs to supervise the disposal of its Lotte Mart branches in China. The decision means the group will begin taking steps toward selling the stores off.

Lotte had originally intended to keep its Lotte Mart stores in China. However, its latest move suggests it has made the decision to disposal of them after a more than six-month-long forced suspension of operations by Chinese authorities and signs that South Korea-China relations continue to sour over the deployment of the THAAD missile defense system.

“The situation with our supermarket sector right now is too much for individual companies to cope with. We’re not ruling out the sale of some or all of our stores,” a Lotte Group source said.

A photo of a protest outside a Lotte Mart in China

The same source stressed that Lotte is “not considering pulling out of other China projects besides supermarkets.”

The sale of the Chinese Lotte Mart branches is the result of heavy losses that have proved unsustainable. Operations are currently suspended at 87 out of 112 Lotte Mart stores in China; the rest are effectively closed as well. Lotte Mart provided an emergency infusion of 360 billion won (US$317 million) in March, and another one of 340 billion won (US$300 million) recently. Despite having no sales, it continues paying wages and other fixed costs. If the trend keeps up, the estimated damages to Lotte Mart are predicted to reach 1 trillion won (US$881 million) by year end.

Since last year, Chinese authorities have launched a concerted attack on Lotte in connection with THAAD. In Nov. 2016, the Chinese government began tax investigations for all Lotte affiliates in China in response to the fact that the initial deployment of THAAD took place on a golf course owned by the Lotte Group. Lotte Mart stores have been unable to reopen since having their operations shut down over fire code violations and other supposed infractions. Following inspections last year of the Jiuxianqiao and Yangqiao Lotte Mart stores in Beijing, the Beijing Municipal Commission of Development & Reform imposed a usage ban, citing “excessive use of electricity” by 23 generators and four transformers, and recently moved to confiscate them for auction.

Chinese protestors have demonstrated in front of Lotte Mart stores in China, with videos posted showing the use of heavy equipment to destroy Lotte products. “Things appear to have gone past the point of recovery now,” said a source with Lotte’s Chinese headquarters.

“We don’t expect the THAAD situation to change until at least the Chinese National People’s Congress next March,” the source predicted.

calling on Lotte to leave China

By Kim So-youn, staff reporter and Kim Oi-hyun, Beijing correspondent

Please direct questions or comments to [english@hani.co.kr]