Lotte’s China businesses continue to crumbleLotte is still struggling in China almost two years since it was targeted by Beijing to get back at Korea for deploying the U.S. Terminal High Altitude Area Defense (Thaad) antimissile system.
Lotte will shut down its last department store in Tianjin by the end of this month, confirmed a spokesperson for Lotte Wednesday. The decision came after Lotte closed another department store in the same city at the end of last year.
Lotte is running three other department stores in China: in Shenyang, Liaoning Province; Chengdu, Sichuan Province; and Weihai, Shandong Province. But the store in Weihai will also close although exactly when hasn’t been confirmed.
Since it entered the China market in 2008, Lotte opened five department stores.
“It’s true Lotte’s store in Tianjin is shutting down,” said the spokesperson, who also confirmed the company’s plan to shut down the Weihai branch.
Lotte’s food and beverage businesses are also suffering in China to the point where the company is considering selling off factories.
Lotte runs six factories in China that produce products for its confectionery and beverage affiliates, Lotte Confectionery and Lotte Chilsung Beverage. The group is said to be considering plans to sell some.
“We haven’t confirmed the number of factories we might have to shut down,” the spokesperson said. “But we are considering measures to raise management efficiency of our food and beverage businesses, which could result in either restructuring or selloffs.”
In 2017, China launched a massive economic retaliation after Korea deployed the antimissile system on its territory. Lotte was a prime target because it swapped a golf course in Seongju County, North Gyeongsang, for a piece of government land, and the golf course became home for the Thaad battery.
The retaliation was wound up last year and Korea saw a gradual rebound of Chinese tourists. But Lotte never recovered in China.
The business group closed or sold all 112 Lotte Mart stores in China as of last year. That affiliate tried to revive the business by injecting 360 billion won ($322.9 million), but failed to yield much success.
“Following the Thaad issue, [Lotte] has been struggling to operate businesses in China, which led us to continue searching for various measures that could raise management efficiency,” the spokesperson said.
BY JIN MIN-JI [firstname.lastname@example.org]