South Korea's Lotte reports store closures in China amid political stand-off

Mon Mar 6, 2017 4:09am EST
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By Joyce Lee and Adam Jourdan

SEOUL/SHANGHAI (Reuters) - Chinese authorities have closed nearly two dozen retail stores of South Korea's Lotte Group following inspections, ramping up pressure on the conglomerate amid a diplomatic standoff that has cast a chill over business ties between the two nations.

Lotte said on Monday that 23 of its China supermarket stores had been shut, reaching from Dandong on China's North Korean border to the wealthy east coast and southern Changzhou, marking a wide clamp-down on the group in its biggest overseas market.

A Lotte Mart spokesman could not provide further details, but workers at three stores said the closures - which they said were temporary - were fire-safety related. The three people asked not be identified due to the sensitivity of the issue.

The Anhui fire department said in a post on its Sina Weibo microblog account on Monday it had temporarily shut two Lotte Mart stores due to fire risks, part of a broader regional sweep over the last month that had led to the closure of 30 stores belonging to a range of companies including Lotte.

The Lotte closures are the latest in a series of incidents affecting South Korean companies in China after cyber attacks and a ban on sales of travel tours to South Korea. Lotte Mart had 115 stores in China as of January contributing to group sales there of over 3 trillion won ($2.6 billion) in 2015.

The incidents come after Lotte approved a land swap outside Seoul last week that will allow South Korea to install the U.S. Terminal High Altitude Area Defense (THAAD) system, in response to missile threat from North Korea.

South Korea's military earlier on Monday said North Korea fired four ballistic missiles into the sea prompting acting president Hwang Kyo-ahn to call for THAAD's swift installation.

But China's government has objected to the deployment of THAAD, saying it has a radar capable of penetrating its territory, while state media has called for a boycott of South Korean goods and services.   Continued...

A Lotte Mart is seen closed in Hangzhou, Zhejiang province, China, March 5, 2017.  REUTERS/Stringer