BIG HEADACHE IN CHINA FOR LOTTE
Boycotts to impact firm’s combined annual sales of US$2.6b in the country
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The Chinese producer of one of the country’s most popular snacks has withdrawn its goods from Lotte Marts across China, saying on Wednesday it would “never cooperate” with the retailer.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”.
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.