---
title: "Lotte's Turmoil: Losses of 6.1 Billion Yuan in China, Korean Staff Fully Withdrawn, Lotte Seeks Chinese 'Buyer'?"
description: "Recently, it was reported that South Korea's Lotte is in talks with several retailers including Yonghui, RT-Mart, and Walmart to sell its China operations, potentially starting with some Lotte Mart stores and expanding to Jiangsu and Zhejiang. After the THAAD incident, Lotte's performance in China has been continuously loss-making, with losses widening. Is Lotte really going to sell its China business? The authenticity of the news is not important; what matters is that Lotte Mart is struggling in China."
author: "New Distribution"
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published: "2017-05-16"
language: "en"
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# Lotte's Turmoil: Losses of 6.1 Billion Yuan in China, Korean Staff Fully Withdrawn, Lotte Seeks Chinese 'Buyer'?

> Recently, it was reported that South Korea's Lotte is in talks with several retailers including Yonghui, RT-Mart, and Walmart to sell its China operations, potentially starting with some Lotte Mart stores and expanding to Jiangsu and Zhejiang. After the THAAD incident, Lotte's performance in China has been continuously loss-making, with losses widening. Is Lotte really going to sell its China business? The authenticity of the news is not important; what matters is that Lotte Mart is struggling in China.

> **Preface:** Recently, it was reported that South Korea's Lotte is in talks with several retailers including Yonghui, RT-Mart, and Walmart, intending to sell its China operations. The sale might start with some Lotte Mart stores as a breakthrough, gradually extending to Jiangsu and Zhejiang. After the THAAD incident, Lotte's performance in China has been continuously loss-making, and the scale of losses is expanding. Is Lotte really going to sell its China business?
**Whether Lotte sells its China business or not, the truth of the news doesn't matter!**
In response to this news, the head of Lotte Mart China stated that the news about Lotte selling its China operations is false. Rumors can spread freely, but official information must be reliable!
The head added that the recall of Korean employees to South Korea is part of Lotte Mart's talent localization plan in China. Currently, the four regional general managers of Lotte Mart have been replaced by Chinese nationals. Korean employees stationed in China are called "resident representatives" at Lotte. This group was originally scheduled to return to Korea in June, but some have applied to stay in China, with their personnel files transferred to China, officially becoming employees of Lotte Mart China. This reflects their confidence in Lotte's development in China. The outside world should not misinterpret this phenomenon; implementing talent localization is a common practice for foreign enterprises in China.
Whether the news of Lotte Mart selling its China operations is true or false is not important to consumers. What matters is that Lotte Mart is not doing well in China!
Since entering the Chinese market, Lotte Group has had little hope of profitability. According to earlier reports from Yonhap, Lotte Group has accumulated losses of 6.1 billion yuan in China since 2011, accounting for 90% of its total overseas operating losses. As early as a month ago, Yonhap reported that China's countermeasures against Lotte's assistance in deploying THAAD have caused difficulties for Lotte Group in China, especially for Lotte Mart, whose losses are "snowballing." Of its 99 stores, 87 have been closed and have not yet resumed operations. Due to the THAAD incident alone, Lotte Mart's operating losses in China have reached 200 billion won (approximately 1.2 billion yuan)...
Currently, Lotte Mart's suppliers are anxious, worried that Lotte Mart may withdraw from China. Many suppliers have come to demand payment for goods and have suspended supply to Lotte Mart, intending to terminate cooperation. It can be said that Lotte's prospects in China are bleak. It is estimated that in the next quarter, if Lotte Group does not exit the Chinese market, it will face losses of up to 400 billion won (approximately 2.4 billion yuan).
**If Lotte fully withdraws, who will take over?**
According to rumors, Lotte has recently been in contact with several retailers such as Yonghui, RT-Mart, and Walmart, intending to sell its China operations. The first batch of sales may focus on Lotte Mart stores in Jiangsu and Zhejiang. On one hand, this region is Lotte (China)'s core market and also the area most severely affected by the store closures due to the THAAD incident. On the other hand, competition in physical retail in Jiangsu and Zhejiang is fierce, and if Lotte intends to sell, it would be highly attractive to physical retail enterprises planning to enter the local market.
In 2002, China Resources Vanguard acquired Suguo Supermarket, becoming a dominant player in East China. Acquiring Lotte (China)'s business in Jiangsu and Zhejiang would undoubtedly increase the acquirer's influence in the region, allowing it to compete with China Resources Suguo.
First, in terms of store count, Lotte Mart has over 60 stores in Jiangsu, making it the most densely populated region in the country. Due to early entry, most stores are located in mature business districts with superior locations and relatively stable customer traffic. Lotte (China) has been deeply rooted in Jiangsu and Zhejiang for years. Although the company is overall loss-making, its offline physical stores remain significant assets. If these hardware conditions are integrated into domestic physical retailers, the future incremental growth should not be underestimated.
Second, Lotte (China)'s suppliers who have suspended supply and its large employee team will become powerful assets for the "new buyer" in the future. For East China, where Lotte has the most stores, this means a powerful and well-equipped "disruptor" is about to enter.
**Chinese Consumers: Once Disloyal, Never Used Again!**
Since Park Geun-hye announced the deployment of the U.S. THAAD missile defense system in South Korea, a wave of "boycott Korean goods" has swept across China. During this period, Lotte Mart, which sold land for THAAD, bore the brunt and suffered heavy losses! However, as people gradually forget and attention shifts, the large number of Lotte Mart stores closed in China are eager to make a comeback and reopen! But will Chinese people change their minds and continue shopping there?
As the "THAAD storm" subsides, the domestic voices of "boycotting Korean goods" are also fading. This is a good opportunity for Lotte to make a comeback in East China. Recently, netizens revealed that some Lotte Mart stores in various parts of China have quietly reopened. The above image is a recent photo of a Lotte Mart in a certain location. Although it has reopened, almost no consumers are entering, only a few passersby.
The cashier is very comfortable now; although the store has reopened, there are few consumers. At this time in the past, there would be long queues, and cashiers would be extremely busy. It seems that if Lotte wants to make a comeback in China, it needs to take action to win back Chinese consumers' hearts. However, no matter what Lotte does, it is difficult to make the Chinese people change their minds. In the end, the only thing they can do is announce: exit the Chinese market.
Although it has reopened, it feels eerily quiet. It's a pity for the fresh milk in the refrigerators; it's too wasteful if it can't be sold.
Recently, Lotte posted this Chinese poster all over Seoul, the capital of South Korea, to "show love" to us! The poster first has eight big characters: "Because we understand, we wait"! Those with sharp eyes will notice two lines of small text below: "Ten inches of time, ten years of heart, Lotte has always kept you in mind, so we understand you." Lotte Korea is asking for forgiveness from the Chinese people.
With no one coming in to shop, employees have to bring goods to the entrance and set up stalls to sell. Thinking back to a few months ago, when Lotte Mart was packed with people, and looking at the current miserable state, it seems they have learned their lesson. And do you have Lotte Mart stores in your area? How are they doing?
Finally, a word for Lotte Korea: Once disloyal, never used again!
**Source: Food Industry Entrepreneur**
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