Land deal could cost Lotte Group dearly

The Republic of Korea's retail giant Lotte Group could see its business in China drop sharply if its board approves a land swap deal with the Korean government for the deployment of a US-made anti-missile system, experts warned.

Lotte Group held a first meeting of the board early this month to discuss the land swap with Seoul's Defense Ministry after a golf course the company owned was selected as the site to deploy the Terminal High Altitude Area Defense anti-missile system. The board reached no conclusion, and the date of the next meeting has yet to be decided.

Beijing is firmly opposed to THAAD deployment on the peninsula, saying that it will damage China's security interests as well as the regional strategic balance.

Since entering the Chinese market in 1994, Lotte, the ROK's fifth-largest conglomerate, has opened 99 big outlets and 16 Lotte Super stores in China.

Jin Yong, a professor of international studies at Communication University of China, said Lotte Group could face Chinese consumer boycotts if it ignores China's opposition to the deployment of THAAD.

"Foreign companies should not earn money from Chinese people and at the same time pose a threat to China's national security," he said and then referred to the recent boycott of Japan's APA hotel. The hotel sparked fury among Chinese and South Koreans after its CEO denied that the Nanjing Massacre and the forced recruitment of "comfort women" had ever happened.

"Lotte is likely to suffer more losses than the Japanese hotel because the Korean retailer relies much more heavily on its Chinese market," said Jin, who had been a visiting scholar in Seoul for a year.

Zhang Liangui, a professor of Korean studies at the Party School of the Communist Party of China Central Committee, said that if Lotte approves the land deal, it will face more difficulties in its development in China.

Last week, Lotte said Chinese authorities had halted its construction of a multibillion dollar real estate project in the northeastern city of Shenyang, Liaoning province, after a fire inspection.

When asked whether the suspension was related to THAAD, Foreign Ministry spokesman Lu Kang said that he had no knowledge of the status of the specific project. "In principle, I can say, China welcomes foreign investment. But companies operating in China must abide by its laws and regulations," Lu said on Feb 8.

The company announced last week that it closed its flagship store on Tmall, China's leading online shopping platform. "We express our appreciation again to those who have shown interest in the Lotte.com flagship shop," the group said in a statement.