A Lotte hypermarket in China
South Korea’s retail giant Lotte Group has signed a deal to sell a theme park project in Shenyang, China – its latest move to pull out of China after struggling for years to do business there amid a US-China diplomatic dispute.
Company officials said on Friday it signed a contract to sell its entire stake in Lotte Glory Properties Shenyang, which has been running the project, to an unidentified Chinese company affiliated with the Shenyang city government.
Financial terms weren’t disclosed but industry officials said the deal is worth about 450 billion won ($327 million).
“The contract has not been fully implemented as we haven’t received all of the sale proceeds,” said a Lotte Group official.
Suspended construction site of the Lotte World theme park in Shenyang, China
The project was to build a complex encompassing a wide range of facilities, including a department store, a hotel, a theme park, a cinema and a residential area.
With a total projected investment of 3 trillion won, Lotte initially planned to complete the construction of the complex on a 1.45 million-square-meter plot of land in Shenyang by 2019.
CHINA’S RETALIATION OVER THAAD
Lotte built a department store and a theater within the complex in 2014 but stopped the entire construction work in 2016 in the wake of Beijing’s retaliation against Korea’s decision to deploy THAAD, the US Terminal High Altitude Area Defense System, in Korea – a potential military threat to the mainland.
Lotte Group Chairman Shin Dong-bin speaks at the opening ceremony for Lotte Mall West Lake Hanoi, a premium commercial complex in Vietnam, on Sept. 22, 2023 (Courtesy of Yonhap)
Industry officials said China’s hostile move against the project came after Lotte offered its golf course in Korea to the US Army for the construction of THAAD facilities.
Lotte Group, Korea’s fifth-largest conglomerate, previously focused on China, the world’s largest consumer market, before it was forced to give up most of its retail and food distribution businesses in China by 2018.
When Lotte’s business operations were in full swing, until 2015, the number of Lotte Mart stores and supermarkets across the country reached more than 100. Lotte also operated five department stores, 12 theaters, five TV shopping malls and food manufacturing facilities in China.
Lotte Group has spent some 10 trillion won on its businesses in China but had to give up on projects without recovering most of its investments, according to industry officials.
The Korean retail giant is also in the process of its business operations in Chengdu, the capital city of Sichuan Province.
Lotte Mall West Lake Hanoi in the West Lake area of Hanoi
Lotte was building a complex in Chengdu – one-third the size of the project in Shenyang, but most construction was put on hold after building an apartment complex and a department store.
LOTTE TURNS SIGHTS TO VIETNAM, INDONESIA
Following its pullout from China, Lotte turned its sights toward Indonesia – Southeast Asia’s largest economy and the world’s fourth-most-populous country – alongside Vietnam.
Lotte Shopping Co., the parent of hypermarket operator Lotte Mart, has been rapidly expanding its business in recent years in Southeast Asia, notably in Indonesia and Vietnam, tapping into the growing popularity of Korean food, Korean culture and all things Korean among 20- and 30-somethings, especially those who like spicy food.
Lotte Mart’s Gandaria City Mall hypermarket in Indonesia
Last year, Lotte also opened Lotte Mall West Lake Hanoi, set to become a premier landmark and business hub in Vietnam’s capital.
Lotte Mart currently operates outlets across Southeast Asia, including 48 stores in Indonesia and 16 in Vietnam.
Lotte Department Store opened Lotte Shopping Avenue, a shopping complex, in Jakarta in 2013. It runs a total of four such outlets in Vietnam and Indonesia.
By Jae-Kwang Ahn
ahnjk@hankyung.com
In-Soo Nam edited this article.
