Lotte and S Korea face China backlash in missile row
March 03 2017 09:16 PM


South Korea’s Lotte Group faces an escalating backlash in China after providing land for a US missile-defence system, amid calls for a wider Chinese rejection of all things Korean.
South Korea’s fifth-largest company, Lotte signed a deal Tuesday to provide land for the US system, which was prompted by threats from North Korea but has also angered Beijing, which fears it will undermine its own military capabilities.
Lotte has already suffered business setbacks and faces mounting threats of retaliation over the Terminal High-Altitude Area Defense (THAAD) system.
The Chinese producer of one of the country’s most popular snacks has withdrawn its goods from Lotte Marts across China, saying on Wednesday it would “never cooperate” with the company.
A Beijing supermarket supply association representing more than 120 enterprises also reportedly plans to retaliate.
A consumer boycott has been launched in northeastern Jilin province, where protesters rolled out a banner in front of a Lotte Mart store on Sunday.
“Lotte supports THAAD, get out of China immediately,” the banner read, according to images on social media.
Last month Lotte was forced to halt construction of a $2.6bn theme-park project in northeastern China after authorities suddenly found safety problems, and Lotte websites have this week been downed by apparent cyber-attacks.
China’s frequently nationalistic Global Times newspaper wrote in an editorial on Thursday that “Chinese society has formed a collective determination to impose sanctions on South Korea.”
Lotte Group said it had no official statement on the backlash when contacted by AFP.
The stakes are high for Lotte, which has invested more than 10tn won ($8.76bn) in its Chinese operations since 1994.
It now has 22 Chinese subsidiaries, 120 outlets and 26,000 employees.
Lotte’s combined annual sales in China amount to around $2.6bn and its vast duty-free shopping empire in South Korea makes 70% of its sales from visiting Chinese tourists.
It has no duty-free stores in China.
“Lotte’s decision has lit a fuse.
When foreign firms touch Chinese consumers’ nationalistic feelings, it can spark a boycott,” said Fu Guoqun, a Peking University business professor.
“This will have quite a huge impact on the company.”
Beijing has not directly threatened Lotte Group, but a foreign ministry spokesman said on Thursday the company’s success in China is “dependent on the Chinese market and the Chinese consumers.”
China, however, has repeatedly denounced the THAAD system as a threat to its security, with foreign ministry spokesman Geng Shuang saying “the consequences entailed will be borne by the US and the Republic of Korea”.
Calls are growing in China for Beijing to use the carrot and stick of its huge market to raise pressure on South Korea to back down.
The Global Times called in a Thursday editorial for South Korea to “pay a heavy price” and warned that the country could lose “the huge Chinese market.” Wang Dong, an expert on Northeast Asian geopolitics at Peking University, said the “situation is not optimistic” with each side believing their national security is at stake.
“There is no doubt that the Sino-South Korean relationship will take a big hit from this,” Wang said.
China is South Korea’s largest trading partner and accounts for one-quarter of its exports.
South Korean media reported on Thursday that China had instructed its travel agencies to curtail Chinese visits to South Korea.
AFP has been unable to confirm the report. On Thursday, a South Korean foreign ministry spokesman said calls for retaliation against the country’s businesses were “worrisome.”
South Korean entertainment exports like K-pop music and Korean soap operas are popular in China.
But several major Chinese video websites have stopped screening some Korean entertainment, and broadcasters are cancelling appearances by South Korean bands, according to reports. The reports have drawn support on Chinese social media. “Money spent on K-pop stars will turn into bullets that point towards you and your family in the future,” said one recent posting on China’s Twitter-like Weibo service.

A Lotte Department Store in Shenyang, Liaoning province. The South Korean firm signed a deal on Tuesday to provide land for the US system, which was prompted by threats from North Korea but has also angered Beijing, which fears it will undermine its own military capabilities.

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