Korean Conglomerate Lotte Abandons Chinese Market, Shifts to Southeast Asia

Lotte Group has completely abandoned the Chinese market and increased its investments in Southeast Asia, particularly Vietnam and Indonesia.

This year marks the 30th anniversary of the establishment of diplomatic relations between South Korea and China. It also marks the 30th anniversary of South Korea’s diplomatic ties with Vietnam.

In 2020, Lotte Group ranked fifth among Korea’s chaebols — large family-run conglomerates — after Samsung, Hyundai Motor, SK and LG. Lotte is the only one of Korea’s top 10 conglomerates headquartered in Japan.

The Lotte World Tower, its Korean headquarters, has 123 floors and is 555 meters high. It is the sixth tallest skyscraper in the world, surpassing New York’s One World Trade Center. Lotte’s line of business includes groceries, department stores, entertainment, finance, chemicals and many other areas.

The Smart City project will be the first in Vietnam

Lotte Group will invest $900 million in the construction of a huge complex, dubbed Eco Smart City, to be built in Ho Chi Minh City, Vietnam, the company said on September 4. The 50,000 square meter project includes a 60-storey shopping mall, apartments, offices and hotels.

Using its advanced smart technology and sales experience, the company plans to build Vietnam’s first and most advanced smart complex.

Lotte CEO Shin Dong-bin said at a groundbreaking ceremony on Sept. 2 that the project is a “starting point” for expanded investment in Vietnam.

“As this year marks the 30th anniversary of the establishment of diplomatic relations between South Korea and Vietnam, and with this project as a fresh start, Lotte Group will continue to expand its investments in Vietnam,” Shin said during the ceremony.

Also Read :  Sabah supports community-based tourism - TTR Weekly

Other Vietnamese and Indonesian investments

In addition to the smart city project, Lotte is currently building the Lotte Mall Hanoi. The large commercial center with an expected total investment of nearly US$300 million will be completed next year.

So far, a total of 19 Lotte Group subsidiaries, including fast-food chain Lotteria and Lotte Hotels & Resorts, have entered the Vietnamese market. The total number of lottery shops in Vietnam exceeds 200, making it the leading fast food chain in Vietnam.

The Korean conglomerate is also expanding its activities in Indonesia, concentrating on the chemical sector. The Lotte Chemical Indonesia New Ethylene (LINE) project, Lotte’s largest foreign investment, is under construction with a total value of US$3.9 billion. Through this project, Indonesia secures its first Naphtha Cracking Center (NCC) and lays the foundation for the development of the local petrochemical industry.

Hit hard by THAAD repercussions

Lotte is still suffering the effects of the CCP’s anger after the THAAD incident five years ago. The conglomerate, which provided land for a missile defense system, was the biggest victim of the CCP’s economic retaliation against South Korea.

In early 2016, North Korea’s nuclear and missile tests sparked tensions in Northeast Asia. To intercept high-altitude missiles from North Korea, the United States and South Korea intended to use the Terminal High Altitude Area Defense (THAAD) missile defense system.

Also Read :  Global Travel Insurance Global Market to 2031 - Featuring Allianz, American Express, Atlas Travel Insurance and Axa Among Others - ResearchAndMarkets.com

The CCP authorities firmly opposed the deployment, arguing that THAAD’s powerful radar could be used to patrol Chinese territory. The Chinese regime launched a series of economic measures against South Korea, including a ban on Korean dramas and films in China, a travel ban to South Korea, and a crackdown on South Korean companies in China.

In February 2017, Lotte agreed to sell a golf course site to the South Korean Ministry of Defense for deployment of the THAAD system. The move sparked protests from the CCP.

Boycott, media attacks by the CCP

Following the THAAD incident, Chinese authorities banned Lotte Mart for allegedly failing to meet fire, health and environmental standards. In addition, the CCP media took an aggressively antagonistic approach to Lotte Group’s business interests in China.

In an editorial entitled “China has no choice but to punish South Korea by cracking down on Lotte,” the Global Times called for “an end” to Lotte Group’s development in the Chinese market. The editorial also argued that China should “gradually escalate import restrictions on South Korean cultural products until they are banned outright, if necessary.”

China Youth Daily said in an op-ed that a Chinese boycott of Lotte has become a “reasonable inevitability.” Hong Kong newspaper Ta Kung Pao, which is controlled by Beijing, also published an op-ed saying Lotte’s actions were unacceptable and she should “go home.”

Also Read :  Australia's PM says he's not in group of Australian MPs to visit Taiwan

Meanwhile, the CCP called for protests and boycotts of the company. In the city of Zibo, Shandong province, protesters held a 10-meter banner reading “The security of the motherland is untouchable.” In Xuchang City, Henan Province, employees at a shopping mall stood in rows, holding up banners protesting Lotte and singing the CCP’s anthem.

Lotte withdraws from China

As a result, Lotte’s various businesses in China have struggled. All 115 stores in China have been closed since 2018.

In 2014, Lotte Group announced plans for a 67,000 square meter theme park featuring a department store, a theme park, a hotel and an apartment complex in Shenyang, China. After the THAAD incident, the project was suspended for years. It was finally approved by Chinese authorities in April 2019, but construction has again been halted by the pandemic and the future of the project is uncertain.

Lotte Shopping continued to operate stores in China after the THAAD incident. However, in July, the group decided to sell their last department store in Chengdu. With the sale, Lotte is effectively giving up his retail business in China after 14 years.

Lotte Group is estimated to have lost about 2 trillion won ($1.5 billion) in China alone as a result of the THAAD incident.

Lisa Bian


Lisa Bian is a Korea-based writer for The Epoch Times, focusing on Korean society, its culture and international relations.

Source link