Lotte seeks China exit, one department store to close this month
As retailers continue to pile into the Chinese market due to its huge consumer base and on-going growth, South Korean giant Lotte is reportedly set to exit China completely as the fallout from a diplomatic spat between South Korea and China appears to have fatally undermined its business there.
The company has invested heavily China in recent years but has found it hard to bounce back from a boycott campaign after it agreed in 2017 to provide land to host a US anti-missile system that Beijing saw as a threat to its national security.
The company had spent KRW8 trillion ($7.2 billion) in China since entering the market with its Lotte Mart chain in 2004 yet the firm’s Lotte Department Store made an operating loss of KRW140 billion from 2016 to 2018. Lotte Mart completed its withdrawal from the country last year but the firm will now start to close down other businesses.
On Wednesday it said that it would close down its Chinese foods ops and said its Lotte Department Store in Tianjin will shut later this month, leaving three Lotte Department Stores operating in the country (in Weihai, Chengdu and Shenyang). It’s unclear when these will close as lease issues mean the company remains tied in to operating the locations. The company launched its department stores in China in 2008 with a local partner in a joint venture deal and had at one point targeted 20 stores by 2018.
As well as the boycott, the company has also faced pressures from local retailers upping their game and from the fact that Chinese consumers are quite sophisticated cross-border e-tail shoppers.
Copyright © 2021 FashionNetwork.com All rights reserved.