[THE INEVESTOR] Lotte Group has decided to close more than 10 Lotte Mart stores in Shanghai, according to the company on March 7.
In a recent crackdown on Lotte’s hypermarket chains as part of China’s retaliatory measures for provided a site for THAAD system, 39 outlets, out of 99, have suspended operations. A total of 35 stores banned from operation are located in Shanghai.
Although the underperformance of Lotte Marts in China is the foremost reason for the restructuring, China’s recent punitive measures has sped up the timeline for shuttering them, with the number of candidates are likely to grow, said a company official.
Lotte Mart posted 124 billion won (US$107.76 million) loss from overseas operations last year and about 80 to 90 percent came from China.
The hypermarket chain has been striving to secure a foothold in China, constantly reshuffling its operations since it entered the market in 2007. This time, however, there is no plans for a new store.
China first slapped a ban on four stores in the week following the group’s signing of a contract with South Korea’s Defense Ministry last week.
The authorities, however, are seemingly limiting the suspension period to one month, which rises speculation that it is trying to minimize the damage to its own citizens. According to Chinese regulations, employees should be paid for a period up to one month when their workplaces are closed after administrative dispositions. Lotte Mart currently employs 14,000 Chinese staff.
By Hwang You-mee (firstname.lastname@example.org)