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Sa-teef

Korean companies exit China as THAAD crisis continues

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Published : Sept 15, 2017

Korean companies operating in China are exiting the market, as anti-Korean sentiment stemming from intergovernmental tensions over Korea’s deployment of an American anti-missile system continues to hit sales.

On Friday, Lotte Shopping said in a disclosure that it had “selected a managing firm and is considering selling Lotte Mart’s stores in China, but no details have been decided at present.”

On Thursday, reports citing sources at Lotte said that Lotte Shopping had decided to sell its Lotte Mart brand’s 112 stores in China under the management of Goldman Sachs. Lotte Mart is a discount retail chain run by Lotte Shopping.
The announcement came after the chain denied for months that it had plans to leave the Chinese market. In March, Lotte Group Chairman Shin Dong-bin stated on the record in an interview that the group “hopes to continue doing business in China.”

Lotte has been one of the worst-hit Korean companies in China, as it had provided the Korean government with the site for the deployment of the Terminal High Altitude Area Defense system as part of a land swap deal.

Beijing has ramped up safety and sanitary inspections on Lotte Mart stores since early this year, leading to the forced and voluntary closures of about four-fifths of its branches.

In the second quarter of this year, Lotte Mart in China saw just 21 billion won ($18.5 million) in sales, roughly one-tenth of sales compared to the second quarter of last year.


To keep its Chinese business afloat, Lotte had injected 360 billion won in March and another $300 million at the end of August.

It is unclear whether Lotte will be able to sell all of its branches. Industry watchers are also carefully monitoring whether this move will lead to Lotte’s downsizing or the sale of its other businesses in China, including theme parks and department stores. Lotte denies that any other businesses are currently being considered for sale.

“We are not considering selling our China confectionery or beverage businesses,” said an official with Lotte group. “We may, however, pursue other measures such as restructuring.”

Lotte Mart’s planned exit follows an announcement in May that its rival in Korea, E-mart, will be closing down its six Chinese branches once their leases expire. At the time of the announcement, E-mart’s parent company Shinsegae said that the closures were due to long-standing losses in China rather than the tensions between the two countries.

Retail is not the only industry that has taken a blow. Hyundai Motors is also suffering from the fallout. The company entered China through Beijing Hyundai Motor, a joint venture with BAIC Motor, in 2002.

Last month, the company’s Chinese plants halted and restarted production, as parts suppliers had been holding back shipments due to overdue payments.

Hyundai Motors confirmed that BAIC Motor has been pressuring Hyundai to either switch parts suppliers to Chinese companies or lower prices paid to Korean parts companies, as Beijing Hyundai’s sales have halved in recent months. Chinese news outlets have been reporting on the deteriorating relationship between the two partner companies, hinting that BAIC Motor might move to completely dissolve the partnership.

Industry analysts in Korea have noted that BAIC’s aggressive approach toward Hyundai will have a negative effect on Korean auto parts companies in China, including Hyundai Mobis and Hyundai Wia.

http://www.koreaherald.com/view.php?ud=20170915000655

Nobody does nationalism quite like the Chinese. 

They always play to win and they never play by the rules, because there are no rules other than their own...subject to change at any moment.

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They always play to win and they never play by the rules, because there are no rules other than their own...subject to change at any moment.

yes, and they have been doing so for years, the rest of the world has yet to understand this and figure out how to deal with it. Maybe Trump's craziness unorthodox style might just be the way
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3 hours ago, Khun Ling said:

They always play to win and they never play by the rules, because there are no rules other than their own...subject to change at any moment.

yes, and they have been doing so for years, the rest of the world has yet to understand this and figure out how to deal with it. Maybe Trump's craziness unorthodox style might just be the way

We can only hope.

I have a friend in the O & G industry who is fond of saying, "Signing a contract with the Chinese is just the beginning of the negotiations."

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8 minutes ago, Sa-teef said:

We can only hope.

I have a friend in the O & G industry who is fond of saying, "Signing a contract with the Chinese is just the beginning of the negotiations."

Too true

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And if you beat them at their own game they will jail you on corruption charges if they can get their hands on you

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Emart begins its pullout from Chinese market

Sept 24,2017

Emart is selling five of its six discount store locations in Shanghai to Thailand’s CP Group, sources briefed on the matter said Sunday.
A spokesman at Korean conglomerate Shinsegae, which owns Emart, confirmed the sell-off was in progress, pending approval from the Chinese government.

For the past four years, Emart has been performing poorly in the Chinese market, accumulating an operating loss of more than 150 billion won ($130 million). The Korean discount chain first entered China in 1997 and at its peak operated 27 stores there.
But the retailer struggled in China, a notoriously difficult market, and began downsizing in 2011, when the operating loss reached 100 billion won.
The six stores in China are all that remain, and when they will close has yet to be decided. Chung Yong-jin, vice chairman of Shinsegae, has said that Emart plans to completely pull out of China by the end of the year.

Details on the deal with CP Group were not disclosed, but industry sources said the five stores were sold at a much lower price than the book value of 68 billion won. CP Group is one of Thailand’s biggest conglomerates and operates a chain of supermarkets in China called Lotus.
The future of Emart’s sixth store has yet to be decided.

Emart was one of the retailers affected by consumer boycotts of Korean products after the Korean government agreed to install an American missile shield known as Thaad earlier this year. China believes the missile shield threatens its security interests, and Seoul-Beijing relations, especially in trade, have been icy since.

Emart’s sell-off comes nine days after rival Lotte Mart decided to leave the Chinese market. Among Lotte Mart’s 99 locations there, 87 have been closed for over six months now after the Chinese government accused the retailer of violating fire safety regulations.

Unlike its competitor, Emart was not directly targeted by the Chinese government, but the consumer boycott nearly guaranteed that the struggling retailer would be unable to turn around its losses in China, and analysts have anticipated Emart’s decision to exit the market.


A report from Shinhan Investment earlier this month said Emart’s sales in China were expected to be so low that withdrawing would likely pull down overall revenue by just 0.4 percent.

In lieu of China, Emart has been shifting focus to other markets in Asia. A store in Mongolia, its second in the country, is set to open this week.

http://koreajoongangdaily.joins.com/news/article/Article.aspx?aid=3038827

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Did enough business in China to never want to go there again.  What a bunch of crooks ... backed by their government!

Will be interesting to see how Trump deals with them.

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