Lotte hit by boycott over land swap for THAAD deployment

Updated 2017-03-01 08:54:49 Global Times
A Lotte Mart supermarket located in Chongwenmen, Beijing (Photo: Huang Ge/GT)

A Lotte Mart supermarket located in Chongwenmen, Beijing (Photo: Huang Ge/GT)

Controversy could hit bilateral trade, economic ties

The general public and companies in China have taken actions to boycott South Korea-based Lotte Group amid growing angers over the company's land-swap deal with South Korean military for the deployment of U.S. anti-missile system Terminal High Altitude Area Defense (THAAD).

At a Lotte Mart supermarket in Chongwenmen, Beijing's Dongcheng district, there were just a few shoppers, most of them elderly, when the Global Times visited it at midday Tuesday. Lotte has more than 100 such supermarkets in China, which account for 29 percent of its global share.

An employee at the supermarket, who declined to be identified, told the Global Times that the store is running as usual. "In the first few days after Lotte's decision was announced, it was hard to feel [that Chinese citizens were responding] because the supermarket's prices are relatively cheaper than its competitors nearby," he said. "But I think gradually we may see reduced consumer traffic."

South Korea's defense ministry on Tuesday signed a deal to exchange government land in Namyanju, Gyeonggi, with a golf course owned by Lotte in Seongju County, North Gyeongsang, where THAAD is to be sited, the Xinhua News Agency reported.

The land-exchange deal was approved by Lotte's board of directors on Monday.

A chewing gum supplier for the supermarket surnamed Liu agreed. "If the Chinese government has taken actions against Lotte, we would be very supportive to force the company out of China," she said.

Another shopper, a 40-year-old man surnamed Ye, said he regularly shops at the supermarket. "I just heard the news today, and I will avoid visiting again."

Although traffic at Lotte's brick-and-mortar supermarkets in China is apparently unaffected at present, Lotte's duty-free store in Seoul, capital of South Korea, has already been struggling due to a decline in Chinese visitors, according to Chinese students who are studying in South Korea.

In the past, the store got 70 percent of its revenue from Chinese tourists.

"I used to work as a part-time Chinese sales assistant at the duty-free shop," a Chinese student surnamed Xue told the Global Times on Monday. "But since the beginning of 2017, the number of tourists from China has plunged by around 10 percent. So the manager said the store did not need to have any extra part-time Chinese assistants."

Xue also said that her Chinese classmates who served as daigou agents ferrying South Korean goods to Chinese clients have mostly declined to purchase in Lotte's duty-free shop as a way to show their strong objections. They would rather not make money than appear to accept Lotte's land-exchange deal, Xue said.

Chinese companies are also joining the boycott. Domestic e-commerce giant JD.com, which announced a strategic partnership with Lotte.com in September 2015, suspended the opening of its Lotte Mart online store on Tuesday morning.

When the Global Times tried to view the South Korea brand's best-selling items on JD.com, some of them had been "removed from the shelves." The Lotte store under JD Worldwide was also no longer available.

Another e-commerce platform, Tmall, closed Lotte's flagship store in January.

Meanwhile, Chinese netizens have rushed to social media platforms like Weibo to express their dissatisfaction.

As of Tuesday, the latest post on the Lotte duty-free store's official Weibo account had received more than 20,000 comments, almost all of which called for a boycott of the South Korea brand.

"It's very simple logic … Lotte is making lucrative profits from Chinese consumers yet it is standing against us and supporting the South Korean government. In other words, the group is actually using our money to put us in danger," a Weibo user named Ranlins said.

Geng Shuang, Foreign Ministry spokesperson, said at a press briefing on Tuesday that the success of foreign companies' business in China hinges on the Chinese market and domestic consumers.

"I believe that Lotte has noticed the attitudes of the Chinese public and their objection to the deployment of THAAD in recent days," Geng said.

Increasing public pressure will take a toll on Lotte's business in China and even in its homeland in the near future, experts warned.

But more importantly, it offers a lesson for the South Korean government and companies, Liang Qidong, vice president of the Liaoning Provincial Academy of Social Sciences, told the Global Times on Tuesday.

"If it proceeds [with THAAD] without respect to the requests of Chinese citizens, bilateral trade and economic relations will suffer at least a 0 billion loss and a setback," Liang said.

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