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90% of Lotte Mart stores suspended in China amid THAAD spat

Several policemen are standing in fron of a Lotte Mart store in China Photo: Yonhap News

Nearly 90% of Lotte Mart stores in China have recently suspended their business amid rising tensions between China and South Korea after the company signed a land swap deal to allow the deployment of an anti-missile defense system on the peninsula, which the Chinese government sees as a threat to its national security, the Yonhap News Agency said on Monday.

67 Lotte Mart stores in China have been ordered to suspend their business due to fire and safety reasons as of March 19, and some 20 more outlets in the country have decided voluntarily to shut the doors as aggressive Chinese consumers have continued to stage anti-Korea protests near the stores, according to the report.

With 99 Lotte Mart stores in the country, Lotte is predicted to suffer a loss of as much as 116.1 billion won ($102.7 million) in its Lotte Mart revenue if the shutdown continues for a month.

Meanwhile, the profitability of Lotte's retail outlet business could further worsen since it is required to pay full wages to local Chinese employees for the first month of the suspension, it said. The average monthly salary of each employee of Lotte Mart in China is about 700,000 won ($625.5), according to the report.

China is Seoul's largest trading partner, and the suspension means a serious blow to Lotte.

On February 28, South Korea’s fifth-largest company, Lotte signed a deal with the country’s government to provide a land plot for the deployment of the Terminal High-Altitude Area Defense (THAAD) system, a US missile-defense system.

The suspension of Lotte Mart stores recently is among a number of issues that have emerged following the deal between Lotte Group and South Korean government, which has been suspected by many as China’s retaliation against South Korea.

In early March, many Chinese travel agencies and some travel websites suspended their tourism products related to South Korea. A lot of restaurants specializing in South Korean food also publicly declared as being owned by Chinese citizens instead of South Koreans.

On March 17, South Korea complained to the World Trade Organization (WTO) about China’s “retaliation” against the companies of its country over the deployment of THAAD on the peninsula, on the basis that China may be in violation of some trade agreements, according to Yonhap.

“We raised the issue to the WTO Council for Trade in Services on March 17 on whether or not China’s measures against South Korea’s tourism and retail companies are in violation of trade agreements,” Yonhap cited Joo Hyung-hwan, minister of the Ministry of Trade, Industry and Energy, as saying on Monday.

In response, China’s foreign ministry spokesperson Hua Chunying said China supports normal trade exchanges between China and South Korea, and is consistently opposed to the deployment of THAAD.

“China has repeatedly expressed its position (on the THAAD issue). We support normal trade exchanges between China and South Korea, but it needs a corresponding basis in public opinion,” she said on Monday when asked about China’s response to the WTO complaint by South Korea.

Chinese Foreign Minister Wang Yi said recently the introduction of THAAD is an obvious mistake, which will not only hurt the interest of neighboring countries, but also threaten the security of South Korea itself. The biggest problem in the current China-South Korea relations is also the controversial deployment plan of the THAAD system by South Korea and the United States, he added.

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