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Lotte bows out of China's market
Published on: 2018-10-16
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030Lotte Mart will be proceeding to close its remaining 12 outlets in China after failing to find a suitable buyer amid soaring losses in the company's China business.
 

Lotte had injected USD 317.8 million into its Chinese business in March last year, followed by a further USD 301.7 million in August that same year to maintain and revitalize its Chinese business but has failed to achieve the goal. The company reported losses of USD 236.6 million last year and has lost USD 882.5 million since the second half of 2016.

031Lotte has since sold 93 outlets to Chinese retail firms Wumei Holdings and Liqun Group this year. However, it has been unable to find buyers for its remaining 12 outlets and has decided to close them as they remain unprofitable and a drag on its bottom line. The outlets that have been sold will no longer be operating under Lotte’s brand name.
 

The company's woes started when it agreed to provide land for the U.S. military to build an anti-missile system on its golf course in South Korea. The company's decision had sparked a wave of anti-Korean sentiment on the mainland and has hurt its business.

A closed Lotte storeA closed Lotte store

In addition, local governments in China had closed down several of its stores on the grounds of fire safety regulation breeches. The closures have cost Lotte USD 1.1 billion, a sum the company has yet to be able to recover from.

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