BIG HEADACHE IN CHINA FOR LOTTE

Boy­cotts to im­pact firm’s com­bined an­nual sales of US$2.6b in the coun­try

New Straits Times - - Business -

SOUTH Korea’s Lotte Group faces an es­ca­lat­ing back­lash in China af­ter pro­vid­ing land for a United States mis­sile-de­fence sys­tem, amid calls for a wider re­jec­tion of all things Korean.

Lotte, South Korea’s fifth­largest com­pany, signed a deal on Tues­day to pro­vide land for the US sys­tem, which was prompted by threats from North Korea but has also an­gered Bei­jing.

Lotte has al­ready suf­fered busi­ness set­backs and faces mount­ing threats of re­tal­i­a­tion over the Ter­mi­nal High-Al­ti­tude Area De­fence sys­tem.

The Chi­nese pro­ducer of one of the coun­try’s most pop­u­lar snacks has with­drawn its goods from Lotte Marts across China, say­ing on Wed­nes­day it would “never co­op­er­ate” with the re­tailer.

A Bei­jing su­per­mar­ket sup­ply as­so­ci­a­tion rep­re­sent­ing more than 120 en­ter­prises also re­port­edly plans to re­tal­i­ate.

A con­sumer boy­cott has been launched in north­east­ern Jilin province, where pro­test­ers rolled out a ban­ner in front of a Lotte Mart store last Sun­day.

Last month, Lotte was forced to halt con­struc­tion of a US$2.6 bil­lion theme park project in north­east­ern China af­ter au­thor­i­ties sud­denly found safety prob­lems, and Lotte web­sites have been downed by cy­ber-at­tacks this week.

China’s fre­quently na­tion­al­is­tic Global Times news­pa­per wrote in an edi­to­rial on Thurs­day that “Chi­nese so­ci­ety has formed a col­lec­tive de­ter­mi­na­tion to im­pose sanc­tions on South Korea.”

The stakes are high for Lotte, which has in­vested more than 10 tril­lion won (US$8.76 bil­lion) in its Chi­nese op­er­a­tions since 1994. It now has 22 Chi­nese units, 120 out­lets and 26,000 em­ploy­ees.

Lotte’s com­bined an­nual sales in China amount to around US$2.6 bil­lion and its vast du­tyfree shop­ping em­pire in South Korea makes 70 per cent of its sales from vis­it­ing Chi­nese tourists.

“Lotte’s de­ci­sion has lit a fuse. When for­eign firms touch Chi­nese con­sumers’ na­tion­al­is­tic feel­ings, it can spark a boy­cott,” said Fu Guo­qun, a Pek­ing Univer­sity busi­ness pro­fes­sor.

“This will have quite a huge im­pact on the com­pany.”

Bei­jing has not di­rectly threat­ened Lotte Group, but a for­eign min­istry spokesman said on Thurs­day the firm’s suc­cess in China was “de­pen­dent on the Chi­nese mar­ket and its con­sumers”.

AFP PIC

A Lotte Group mall in Shenyang China. The re­tailer is fac­ing a mount­ing back­lash in the coun­try af­ter pro­vid­ing land for a US anti-mis­sile sys­tem.

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