The Gwangbok branch of Lotte department store in Busan is forced to close indefinitely from June 1, and around 3,000 workers are at risk of losing their jobs.
The Busan city government refused to extend the company’s operating license due to a broken promise dating back more than a decade.
The Gwangbok branch of the Lotte department store, which opened in December 2009, operated annually with temporary permits from the city government, but the government rejected this year’s extension.
“Around 100 Lotte-owned employees will get paid time off, but we need to have further discussions about workers belonging to each store running business in the Gwangbok branch,” a Lotte Shopping spokesperson said.
Lotte department stores are operated by Lotte Shopping.
About 800 stores operate businesses in the Gwangbok branch of Lotte department store, with a total number of employees of 3,000.
The relationship between Lotte Department Store and the Busan City Government dates back to 1995. The Gwangbok branch is located on a 195,690 square meter site in Jungang-dong, Jung District, Busan, where was located the old building of the city government complex. Busan city government sold the site to Lotte department store as the department store promised to build a 107-storey Lotte tower which includes residential units.
The company completed construction of the Lotte Department Store in December 2009, but not the Lotte Tower. The Busan city government did not give the department store formal permission to start the business, but required it to obtain temporary permission every year.
Permission ends on March 31 each year, and since the city government rejected the extension, the store had no choice but to close.
Lotte Shopping began construction of Lotte Tower in 2009, the year Gwangbok Department Store opened, but construction was halted.
Lotte Shopping said it would speed up the construction of Lotte Tower, although it blames the city government for the situation.
“If we turn the 100-plus-story building into hotels or tourist facilities, the profitability drops sharply because there is not enough demand in Busan,” the Lotte Shopping spokesperson said. “So we proposed an alternative plan to the city government and came to an agreement, but it came to nothing each time the city has a new mayor.”
“We will accelerate construction with the goal of completing it by 2026.”
BY CHOI HYUN-JU, SARAH CHEA [[email protected]]