Lotte Shopping is withdrawing its department store business from China, closing its only remaining Lotte department store in the country after failing to recover from the terminal’s high altitude area defense line (Thaad).
Thaad is a US-led anti-missile system deployed in Korea in 2017. China imposed economic sanctions on Korea after its deployment, calling the system a US ploy to spy on China.
The Chengdu branch is the only branch of Lotte department store in China. The company operated five branches in 2016, but closed them one by one after being hit hard by the fallout from Thaad.
The decision to sell the branch was made at a July board meeting. Lotte Shopping said a bid or sale price has not been decided.
Although time has passed since Thaad, the Chengdu branch is not doing well. The branch posted sales of 5 billion won ($3.8 million) in the second quarter, down 35.8% year on year.
Lotte Shopping also operates Lotte Mart, a discount store, but closed all Chinese branches in 2018. Existing Lotte Mart branches were sold to Chinese retailers including Wumei and Liqun.
After the company sells its department store branch, Lotte Shopping will only operate Lotte China Management in China. The company is 70% owned by Lotte Shopping, 15% by Lotte Corporation and 15% by Lotte Chemical. The subsidiary does not operate stores or services, but serves as a control tower to support Lotte’s Chinese operations.
Coming out of China, Lotte Shopping plans to focus on Southeast Asian countries. It operates two large Lotte stores in Vietnam from the second quarter and one in Indonesia. It has 49 Lotte Marts in Indonesia and 14 in Vietnam.
BY LEE TAE-HEE [[email protected]]