Lotte targeted by China’s probe: reports

A large-scale investigation against Lotte Group’s businesses in China is increasingly seen here as a retaliation against the company’s decision to provide its golf club as a site to deploy the controversial US advanced missile defense system.

Local media reported on Monday that Lotte appeared to be the sole foreign company under investigation in China, citing an anonymous industry source. “There are some companies which received a fire inspection or tax investigation but no company is facing such a full-scale investigation like Lotte,” the source was quoted as saying by Yonhap News Agency. 

The report also said that Lotte is scaling down its home shopping business in China by selling some of its businesses to local companies.

“The company is still gathering the information regarding the matter and it will fully cooperate with investigations in China,” a Lotte official told The Korea Herald.

”The selling of home shopping businesses was before all this happened and we sold them as the business was not as good as we expected,“ the source said.

The investigation over Lotte in China coincided with the firm’s deal with the government to use the land lot in Seongju, North Gyeongsang Province, to host the Terminal High Altitude Area Defense system. But the Chinese government has not confirmed whether the investigation is related to the THAAD decision.

The Global Times, a Chinese newspaper, on Friday reported that the investigation is a “legitimate regulatory action, and that it was not related to the company‘s involvement in the deployment of the US missile system,“ citing Chinese scholars.

While industry watchers and analysts question the motivation behind the investigation, measures that could be taken by the Korean government or Lotte seem to be limited.

A Korean analyst based in Shanghai said there are no measures that could be taken as the Chinese government is keeping its silence over the matter. “It appears to be a retaliation (for the land swap for the THAAD deployment) but as long as China says it is in accordance with their law, there is nothing we can do about it,” the analyst said on the condition of anonymity.

The Ministry of Trade, Industry and Energy on Friday said it held a meeting to monitor the current status of Korea-China trade including the rumored ban on Korean cultural products and tours and tightening customs and quarantine condition.

More than 150 Lotte stores and offices were put under fire and safety inspection last week. The Chinese authorities also launched a tax investigation and raided the regional headquarters of Lotte Group in Shanghai.

By Park Ga-young (gypark@heraldcorp.com)