Lotte gets approval for China property project as bilateral tensions ease

SEOUL: Lotte Corp said yesterday that a major property development in China had received approval from local authorities to start a second phase of construction - the latest sign that tension between Beijing and Seoul is easing.

The announcement comes one week after an unexpected detente between the two countries which have been at odds over the deployment of a US anti-missile system in South Korea – a dispute that has battered South Korean businesses that rely on Chinese consumers.

The Lotte conglomerate has been among the hardest hit by the political tension after it agreed to hand over land for the defence system, angering Beijing which says the system’s radar can penetrate its territory.

A Lotte spokesman said the approval to build commercial complexes at its 66,000 square metre Chengdu land project, worth some 1 trillion won (684.99 million pounds), came on Oct 31 – the same day that Seoul and Beijing announced they had agreed to mend ties.

“Investors are hoping that from 2017 earnings will improve drastically as relations between South Korea and China get better and Chengdu is one piece of news that is adding to that,” said Joo Young-hun, analyst at Eugene Investment & Securities.

But construction at Lotte’s Shenyang project, which covers 1.45 million square metres, remains suspended, said the spokesman for Lotte Corp, the conglomerate’s holding company.

Construction has been halted since a December inspection for fire hazards. Lotte plans to build apartments and a theme park at the Shenyang project in addition to a department store and a movie theatre that are already open.

Lotte’s retail outlets have been particularly hurt by the political tension with most of its hypermarkets and supermarkets in China shut down. They are set to sold for a fraction of what it invested. — Reuters