Having failed to recover from the Terminal High Altitude Area Defense (Thaad) row, Lotte Shopping is withdrawing its department store business from China.
Chengdu is Lotte’s only remaining branch in China. Following the Thaad fallout, the company has closed five of its branches over the past two years. According to sources, this decision was made by the board of directors at its July meeting. As of now, the buyer or the sales price has not been decided, Lotte Shopping said.
The Chengdu branch performance hasn’t picked up since Thaad. In the second quarter, the branch reported sales of KRW 5 billion (USD 3.8 million), a decrease of 35.8 percent over the same quarter last year.
As part of Lotte Shopping’s discount store business, all Lotte Mart branches in China were also shut down in 2018. Wumei and Liqun, two Chinese retailers, purchased the rest of the Lotte Mart franchises.
As soon as Lotte Shopping sells its department store branch, the company will only operate Lotte China Management in China. While the subsidiary doesn’t operate stores or services, it functions as a control tower to support Lotte’s Chinese operations.
As Lotte Shopping moves outside of China, it plans to focus on Southeast Asian countries. As of the second quarter, it operated two Lotte Department Stores in Vietnam and one in Indonesia. Currently, Lotte Mart operates in 49 Indonesian locations and 14 in Vietnam.