April 26, 2024

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[THE INVESTOR] E-mart has decided to close down its business in China two decades after it first entered the country, the company said on May 2.

E-mart currently has six stores in Asia’s biggest economy, following moves to downsize operations from 2011 onward. It plans to wrap up its business by selling the remaining stores that are mostly located in Shanghai and on the outskirts of the city, over the coming months, an official from the outlet chain said, declining to be identified.

The outlet operator, a key affiliate of Korean retail conglomerate Shinsegae, tapped China in 1997 as part of an aggressive drive for foreign expansion with an aim to set up 1,000 E-mart stores in the neighboring market.

It had expanded to as many as 26 stores by the end of 2010, only to end up with cumulative losses of around 100 billion won (US$88.30 million) in 2011 alone. The aggregate amount of operating losses from its Chinese businesses stood at around 150 billion won as of end-2016, even after scaling down its presence, with a net loss of 21.6 billion won.

“We’re looking at a complete closure by the end of this year, given that we reached a compromise on the issues with staff employment and the lease,” the official said.

Continuing jitters from China’s hostile policies on Korean companies after Seoul’s deployment of THAAD have given little hope for the retailer to withstand more setbacks, they added.

By Alex Lee and newswires (alexlee@heraldcorp.com)