April 19, 2024

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[THE INVESTOR] Lotte Mart said on April 26 it is selling some of its Chinese outlets to local retail giant Wumart for 248.5 billion won (US$230 million), seven months after it decided to suspend regional operations due to sluggish sales.

The deal includes the Korean supermarket chain’s 22 stores in and around Beijing. Lotte Shopping Holdings will sell 87.38 percent of its shares in the Chinese unit to Wumei Holdings that owns Wumart, one of the nation’s largest retail companies. 

“It is true that Chinese companies were initially reluctant to negotiate with us due to the Chinese government’s hostile stance toward Korean businesses,” a Lotte Mart official told The Investor on condition of anonymity. “But now the mood has changed a lot.”

Sources say Lotte is also in talks with Liqun Commercial Group in Qingdao to sell 74 stores in and around Shanghai, while it is still looking for a buyer for the rest of some 30 stores. It aims to sell off the entire Chinese operations by the year-end.

Earlier, Thailand’s CP Group reportedly showed interest in acquiring Lotte Mart’s Chinese unit but it seems to have given up possibly due to the high price.

Lotte Mart, hit hard by the diplomatic tensions between Korea and China in recent years, started seeking to sell its Chinese unit since late last year. Its sales in the country tumbled from 1.13 trillion won in 2016 to 263 billion won in 2017.

It is withdrawing from the crucial market since it opened its first store there back in 2007. The firm said it will focus more on Southeast Asian markets such as Indonesia and Vietnam.

By Park Ga-young (gypark@heraldcorp.com)