S
ervice has rarely been swifter at
the eight Lotte Duty Free stores in
South Korea. Polite young staffers
smile anxiously at the occasional cus-
tomer. Ask where the crowds are and
the answer is simple: The Chinese have
stopped coming.
China has banned tour groups from
going to South Korea, and that’s just
one of several devastating blows Beijing
is inflicting on the Lotte Group, the
country’s fifth-largest chaebol. China
is punishing Lotte in South Korea and
China for handing over a golf course
southeast of Seoul so the U.S. could in-
stall an antimissile battery. The system
is capable of shooting down a North
Korean missile up to 90 miles over-
head, and China has been protesting
ever since South Korea’s conservative
government agreed to it over a year ago.
But Beijing waited until the first com-
ponents arrived from the U.S. in March
before retaliating. China is worried that
the system, known as THAAD, for Ter-
minal High Altitude Area Defense, will
also track whatever it’s flying or firing.
On the mainland, Beijing shut 74 of
Lotte Mart’s 99 outlets, citing fire viola-
tions. Then Lotte, finding that “the at-
mosphere is not very good,” as a spokes-
woman delicately put it, closed another
- A discounter that sells everything
from clothing to home appliances, Lotte
Mart racked up $1 billion in revenue in
China last year, and Chinese accounted
for nearly half of the million customers
that poured into its stores around Asia
every day.
As if those penalties weren’t enough,
Chinese authorities for a month shut
down Lotte Shanghai Foods, a 50-50
joint venture with U.S. chocolate com-
pany Hershey. They also suspended
construction of a Lotte shopping com-
plex in Shenyang, citing fire violations.
Other Korean companies, especially
Hyundai Motor, Kia Motors, Amore-
pacific, LG Household & Health Care
and CJ Entertainment, have also felt
the fallout of the Chinese actions.
Officials at the Chinese embassy in
Seoul had no comment.
The timing could not have been
worse for Lotte. While absorbing the
blows from China, the group’s founder,
94-year-old Shin Kyuk-Ho, bound
to a wheelchair, and his sons, Lotte
chairman Shin Dong-Bin (No. 30 on
the list) and Shin Dong-Joo (No. 28),
were in Seoul
District Court
facing charges
from last year of
fraud, embezzle-
ment and tax
evasion. Then last
month Dong-Bin
was indicted on a
bribery charge in
connection with
the presidential
scandal (see p.
70). The brothers’
older half-sister,
Shin Young-Ja, al-
ready in jail for ac-
cepting kickbacks,
was in court again on an embezzlement
charge. And the founder’s de facto third
wife, Seo Mi-Kyung, 58, who was Miss
Lotte in 1977, stands accused of tax eva-
sion. All five family members deny all
of the charges. The brothers’ fortunes
have each fallen dramatically. Their
father turned over most of his wealth
to family members, so his $560 million
fortune falls short of making the list.
How long will China punish South
Korea, and Lotte, for THAAD? The
South Korea’s 50 Richest
The Wrath of China
Lotte learns how much damage Beijing can do when it’s mad.
BY DONALD KIRK
IMAGINE CHINA/NEWSCOM