SEOUL, Aug. 31 (Korea Bizwire) — South Korea’s retail giant Lotte said Thursday it will inject another $300 million into its hypermarket chain in China, which is bearing the brunt of Beijing’s apparent economic retaliation over Seoul’s deployment of a U.S. missile defense system.
Lotte Mart, the operator of the group’s hypermarket chain, said Lotte Shopping Holdings (Hong Kong) Co. will borrow the money from Chinese financial institutions to cope with the snowballing losses it is suffering in the neighboring country.
Of the total, $210 million will be used to repay loans with the remaining $90 million to be spent on operating its Chinese retail unit to cover the costs of buying products and giving wages to its employees, Lotte said.
The Chinese unit of Lotte’s discount store chain has been teetering on the brink of collapse following the deployment of a Terminal High Altitude Area Defense (THAAD) battery here.
China has ratcheted up pressure on the country’s fifth-largest conglomerate since it handed over a piece of land to the Korean military to be used as the site for the missile defense system.
According to Lotte Group, South Korea’s fifth-largest conglomerate, 87 Lotte Mart stores operating in China have been put under suspension since mid-March. The accounts for nearly 80 percent of 112 Lotte Mart outlets, including 13 supermarkets, in the neighboring country.
Lotte Mart is estimated to have suffered some 500 billion won ($444 million) in losses since March so far. Industry watchers say the losses could reach 1 trillion won by the end of this year if the current situation continues.
Last year, sales from China-based Lotte Marts reached 1.13 trillion won or 94 billion won on a monthly basis, according to the firm.