April 25, 2024

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[THE INVESTOR] Lotte Group said on Feb. 8 the Chinese government has ordered it to halt a 3 trillion won (US$2.6 billion) theme-park project in northeastern China possibly in retaliation against South Korea’s planned deployment of the US-made missile defense system THAAD.

The Lotte Town Project aims to create shopping malls, hotels, theme parks and residential complexes on a 160,000 square-meter site in Shenyang by 2018. Currently, a department store and a movie theater have already started operations. 

Simulated bird‘s eye view of the Chinese Lotte Town in Shenyang. Lotte Group.

Lotte said Chinese authorities suspended the construction of Lotte World Theme Park, one of the most essential component of the mega project, in December, citing safety issues, including fire control. The construction is expected to resume as early as in April, sources said.

Since the end of November last year, when the THAAD issue first surfaced, Chinese authorities have been ramping up economic retaliation against Korean firms doing business locally. Especially, Lotte has been under extra scrutiny as the retail giant has tentatively decided to offer one of its golf courses as the THAAD site.

All-round tax and safety inspections have been carried out at Lotte’s department stores and discount stores across China since November.

“There is no actual financial loss since the construction is suspended for a certain period during the winter season anyways. But the Chinese government seems to be putting a symbolic pressure on us ahead of the decision to provide the THAAD site,” a Lotte executive was quoted as saying by Money Today, a local news outlet.

“If a final contract is signed for the site, we expect China will be even more aggravated.”

Lotte has invested more than 10 trillion won since its entry into China in 1994. Lotte Confectionery, Lotte Department Store, Lotte Mart and other 22 subsidiaries and affiliates have entered the market with more than 120 work sites and 26,000 employees.

By Alex Lee (alexlee@heraldcorp.com)