* Lotte exec denies speculation on China business reduction
* Hotel Lotte IPO depends on duty-free business
(Adds Lotte official quote, Lotte Mart China sales)
By Joyce Lee
SEOUL, April 3 South Korea's Lotte Group will
continue to invest in its China business despite diplomatic
tensions over the deployment of a U.S. missile defence system, a
Lotte executive said on Monday, denying rumours it wants to
scale back there.
Chinese authorities closed dozens of Lotte retail stores
following inspections, ramping up pressure on Korea's
fifth-largest family-run conglomerate after it agreed to provide
land for the U.S. Terminal High Altitude Area Defense (THAAD)
missile system outside Seoul.
South Korea and its ally the United States say the system is
designed to thwart nuclear-armed North Korea's missile threat,
but Beijing says its radar can also reach far into China.
Chinese state media have called for a boycott of Lotte
businesses in response to the THAAD deployment.
"It's been 20 years since Lotte entered the China market ...
we believe the China business is still in an investment period,"
high-ranking executive Hwang Kag-gyu told reporters.
South Korean media including Yonhap have raised the
possibility of Lotte scaling back its China business in the wake
of the backlash against the company there.
Lotte has not outlined a strategy to cope with the
difficulties besides "waiting" for it to blow over.
Chinese signs reading "(We) understand you. So (we) wait,"
were put up in Lotte's flagship department store in Seoul last
"As a market, China isn't yet fully developed, especially in
the middle and western regions. In order to grow globally, China
is needed," a Lotte official who declined to be identified said.
"The THAAD issue is not something one company can solve."
Out of 99 Lotte hypermarkets in China, 75 had been closed by
Chinese authorities as of April 2, a Lotte Mart spokesman said.
Lotte Mart reported 1.13 trillion won ($1.01 billion) in China
sales last year.
China is Lotte's biggest overseas market and generated about
3 trillion won in 2016 revenue. It is one of four strategic
markets along with Vietnam, Russia and Indonesia that Lotte has
been focusing on, as retail growth in its home market slows.
Hwang said the planned initial public offering of Hotel
Lotte would depend on its key duty-free business recovering from
the "THAAD effect". What had been a $4.5 billion IPO was shelved
"All we can do is watch," he said.
South Korean airlines and tourism operators have also
experienced discriminatory tactics from China, hitting the
country's duty free market.
($1 = 1,114.0000 won)
(Reporting by Joyce Lee; Editing by Stephen Coates)