Lotte caught in THAAD dispute
By Lee Hyo-sik
Lotte Group has been dragged into the controversy over where Korea deploys the controversial U.S. anti-missile battery, after its golf course in Seongju County, North Gyeongsang Province, emerged as the most probable alternative site.
Korea’s fifth-largest family-controlled conglomerate fears its duty free stores, hotels and other businesses that cater to Chinese visitors will be adversely affected if the government decides to install a Terminal High Altitude Area Defense (THAAD) battery at the Lotte Skyhill Country Club (CC), north of downtown Seongju. Lotte officials are also worried that its businesses in China will suffer.
Lotte is unlikely to get fair value for the golf course because the government offers compensation based on the property’s appraisal value, which is much lower than the market price.
However, the conglomerate is not in a position to publicly oppose the possible THAAD deployment to one of its most profitable golf clubs because its Chairman, Shin Dong-bin, his family members and heads of Lotte units are under investigation on allegations of breach of trust, embezzlement and other irregularities.
“We cannot comment on matters related to national security,” a Lotte Group official said. “Nothing has been decided yet (as to where THAAD will be deployed). What we can do now is closely monitor the situation.”
The official said Lotte has not been informed by the Ministry of National Defense, expressing frustration over media reports that the ministry has begun considering Skyhill CC as a possible THAAD site after Seongju residents opposed the battery’s deployment to an existing artillery unit, which is next to the civilian area.
Lotte operates the country’s largest duty free store and hotel chains that heavily rely on Chinese tourists. Visitors from the mainland accounted for about 70 percent of its customers in the first six months of the year, while about 35 percent of guests at Lotte Hotel are Chinese.
Many Chinese tourists visit Lotte Mart stores to buy household items, while the Lotte World Theme Park in southern Seoul is popular with Chinese visitors.
Lotte also operates dozens of Lotte Mart stores in China and wants to expand its retail and entertainment businesses there.
But if the anti-missile battery is deployed at the Lotte golf club, this would deal a severe blow to the conglomerate because China strongly opposes Korea’s THAAD development.
“Lotte is dragged into a very sensitive issue between Korea and China,” an executive at one of the country’s major business associations said. “This is not good at all for its business. The group certainly doesn’t want to have anything to do with THAAD. But now it is at the center of the growing controversy.”
Lotte could face China’s retaliation if Skyhill CC is confirmed as the site for THAAD, according to the executive, who said its businesses in Korea and China would suffer significantly.
Soon after Korea’s decision to deploy the anti-missile battery in July, China took several “retaliatory” steps, such as restricting the issuance of multiple entry visas to China, imposing more stringent rules on Korean goods and banning Korean entertainers from appearing in public.
“But the problem is that Lotte cannot publicly oppose the THAAD deployment to its golf course because its chairman and other founding family members are facing prosecution investigation,” he said. “The sad thing is that Lotte has no control over its fate.”