South Korea’s Lotte Mart (Photo : Getty Images)
On Monday, an executive of South Korea's Lotte Group said that the company will continue doing business in China. Rumors have spread that the group intends to decrease its investments in China due to the THAAD dispute.
Dozens of Lotte retail stores have been closed by Chinese authorities last month. The shutdown has caused an increased pressure on the company. South Korea's fifth-largest family-run conglomerate had previously offered land for the U.S. Terminal High Altitude Area Defense (THAAD) missile system outside Seoul.
According to South Korea and the U.S., the THAAD missile system is intended to hinder the missile threats of North Korea. However, Beijing raised the concern of the system’s radar reaching China.
As a response to the THAAD deployment, Chinese state media have appealed for its citizens to boycott Lotte businesses.
"Currently we plan to continue to invest in our China business and continue to strengthen the business," said Lotte executive Hwang Kag-gyu.
Hwang is the top leader of Lotte Corporate Innovation Office. He is deemed as the second to highest executive, following Chairman Shin Dong-bin.
"It's been 20 years since Lotte entered the China market . . . we believe the China business is still in an investment period," Hwang said.
The rumors that the group is scaling back its businesses in China after the shutdown and the boycott have been spread by South Korean media, including wire service Yonhap.
According to a Lotte Mart spokesman, 75 out of the 99 Lotte hypermarkets in China had been shut down by Chinese authorities as of April 2.
Lotte was trying to resolve the issues concerning the hypermarkets that were brought up by Chinese officials at the back of the THAAD deployment, Hwang said.
China is Lotte’s largest market abroad gaining more than $2.70 billion annual revenue in 2015. The country is also among the company’s four strategic markets along with Vietnam, Russia and Indonesia. Lotte has been concentrating on these markets as its retail business in South Korea has declined.
The planned $4.5 billion initial public offering of Hotel Lotte, which was postponed last year, would rely on the recovery of its major duty-free business from the “THAAD effect,” said Hwang.
"We do not know 100 percent what their [Chinese authorities'] intentions are, so concerning future developments, all we can do is watch," he said.
South Korea’s Lotte Group is working to resolve the effects of THAAD dispute so it can keep on doing business in China.
