South Korean firm Lotte, Seoul face China backlash in missile row

Lotte - and South Korea - face China backlash in missile row

Beijing (AFP) - South Korea's Lotte Group faces an escalating backlash in China after providing land for a US missile-defence system, amid growing concern that the row will mushroom into wider Chinese retaliation against Seoul.

South Korea's fifth-largest company, Lotte signed a deal Tuesday to provide land for the US system, which was prompted by threats from North Korea.

But the plan has also angered Beijing, which fears it will undermine its own military capabilities.

Lotte has already suffered business setbacks and faces mounting boycott threats over the Terminal High-Altitude Area Defense (THAAD) system.

The Chinese producer of one of the country's most popular snacks has withdrawn its goods from Lotte Marts across China, saying Wednesday it would "never cooperate" with the company.

A range of other actions have been taken, including a consumer boycott in northeastern Jilin province, where protesters last weekend unfurled a banner at a Lotte Mart store saying "Lotte supports THAAD, get out of China immediately."

Last month Lotte was forced to halt construction of a $2.6 billion theme-park project in northeastern China after authorities suddenly found safety problems, and Lotte websites have this week been downed by apparent cyber-attacks.

Underlining the possibility of even wider Chinese retaliation, Beijing travel agencies said Friday they could no longer arrange trips to South Korea after Yonhap news agency reported the order was handed down by Chinese authorities.

"Please consider going to other countries. Trips to South Korea are suspended due to policy and safety factors," said a woman staffer at CYTS online service, one of China's biggest travel companies.

Staff at two other travel firms said the same.

- Lighting a fuse -

China's frequently nationalistic Global Times newspaper wrote in an editorial Thursday that "Chinese society has formed a collective determination to impose sanctions on South Korea."

The stakes are high for Lotte, which has invested more than ten trillion won ($8.76 billion) in its Chinese operations since 1994.

It now has 22 Chinese subsidiaries, 120 outlets, 26,000 employees, and annual sales in China of around $2.6 billion.

It has no duty-free stores in China, but its vast duty-free empire in South Korea makes 70 percent of its sales from visiting Chinese tourists.

"Lotte's decision has lit a fuse. When foreign firms touch Chinese consumers' nationalistic feelings, it can spark a boycott," said Fu Guoqun, a Peking University business professor.

"This will have quite a huge impact on the company."

Lotte Group declined comment when contacted by AFP.

Beijing has not directly threatened Lotte Group, but a Chinese foreign ministry spokesman said the company's success in the country is "dependent on the Chinese market and the Chinese consumers."

China has repeatedly denounced THAAD as a threat to its security, with a foreign ministry spokesman saying "the consequences entailed will be borne by the US and the Republic of Korea".

Calls are growing in China for Beijing to use the carrot and stick of its huge market to raise pressure on South Korea to abandon the THAAD plan.

The Global Times warned in a Thursday editorial that South Korea could lose "the huge Chinese market" over the row.

- Big hit -

Shares in major South Korean tourism and cosmetics firms catering to Chinese consumers were hammered Friday after the reported travel shutdown, with Hotel Shilla, a hotel chain and duty free operator linked to Samsung group, plunging 13 percent.

Wang Dong, an expert on Northeast Asian geopolitics at Peking University, said he was "not optimistic" toward a possible resolution, with each side believing their national security is at stake.

"There is no doubt that the Sino-South Korean relationship will take a big hit from this," Wang said.

China is South Korea's largest trading partner and accounts for one-quarter of its exports.

On Thursday, a South Korean foreign ministry spokesman said calls for retaliation against the country's businesses were "worrisome."

South Korean entertainment exports like K-pop music and Korean soap operas are popular in China.

But several major Chinese video websites have stopped screening some Korean entertainment, and broadcasters are cancelling appearances by South Korean bands, according to reports, which have drawn support on Chinese social media.

"Money spent on K-pop stars will turn into bullets that point towards you and your family in the future," said one recent posting on China's Twitter-like Weibo service.

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