Chinese Lotte stores shut amid political row, fears over S. Korea retail sales to Chinese tourists

South Korea's Lotte Group said on Monday four of its retail stores in China were closed after inspections by authorities, as Seoul protests at discriminating action by China after Lotte agreed to provide land for a U.S. missile defence system.

China is the biggest overseas market for Lotte Group, South Korea's No.5 conglomerate, generating annual sales of a little more than 3 trillion Korean won ($2.60 billion) in 2015.


Lotte is suffering the fallout of a political row that also threatens to dent Chinese retail spending in South Korea


A Lotte Mart spokesman said the four stores, in Dandong, Changzhou and two other locations, were closed last week after the inspections, but could not provide further details. Lotte Mart had about 115 stores in China by January.

The retail closures came after affiliate Lotte International Co Ltd approved a South Korean land swap last week to allow the U.S. Terminal High Altitude Area Defense (THAAD) system, which is being installed in response to North Korea's missile threat. South Korea's military said earlier on Monday North Korea fired "multiple ballistic missiles" from its Tongchang-ri region, where a missile base is located.

South Korea's acting president Hwang Kyo-ahn said on Monday Seoul should swiftly complete the THAAD deployment after the launch of the missiles but China has objected to the deployment of the missile system, saying it has a radar capable of penetrating Chinese territory.

Shares in Lotte Shopping, of which Lotte Mart is a business division, fell 2 percent by 01:55 GMT, compared with a 0.2 percent drop in the wider market.

Lotte's travel retail business, Lotte Duty Free, said on Thursday a cyber attack using a Chinese internet protocol (IP) addresses had crashed its website. It is currently back online.

FEARS OF CANCELLATIONS

China's tourism ministry instructed tour operators in Beijing on Thursday to stop selling trips to South Korea from March 15, with the order spreading to other regions across the mainland, an official at Korea Tourism Organization said on Monday. The order came days after the Lotte land swap.

A Chinese company abruptly cancelled its plan to send some 5,000 employees to South Korea's Incheon city in April, the official said, adding that there were concerns about more cancellations by group tourists.

Shares of tourism, cosmetics, and airline firms extended losses on Monday, although the declines were not as severe as those on Friday.

On Friday, China cancelled its invitation for South Korea Trade Minister Joo Hyung-hwan to its annual Boao forum, the ministry said on Monday. The forum's office cited a lack of panels for a session to which Joo was invited, the ministry said, without elaborating further.

On Sunday, Joo expressed "deep concerns over a series of actions in China" and protested against discriminating action by China towards South Korean companies.

"We will act accordingly to international law against any actions that violate policies of the World Trade Organization (WTO) or the free trade agreement between South Korea and China," he said.

 

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