Economy

Lotte Shopping picks Goldman to manage sales of supermarkets in China

Lotte Shopping picks Goldman to manage sales of supermarkets in Chinaā€¯

Lotte Group announced on September 14 that it is going to sell its Lotte Mart stores in China and selected Goldman Sachs as the lead manager to that end.

Until recently Lotte had planned to sell off only the worst-hit stores in China, but now it seems they will all go. The decision follows the closure of about 80 percent of Lotte Mart stores in China for more than six months.

Lotte Shopping will not rule out selling all supermarkets in China as the conglomerate contemplates a way forward amid a diplomatic row that has crippled its business in the country, a senior company official told The Nikkei. According to experts, this is because Lotte Group provided its golf course in South Korea for the deployment of the missile defense system.

China has pressured South Korean businesses via boycotts and bans since Seoul decided a year ago to deploy a USA -made missile defense system as a deterrent to nuclear-armed North Korea. "Nothing has been fixed yet, but Lotte Mart may sell off everything it has in China or a significant chunk of it". 87 out of them have been shut down since China's economic retaliation following THAAD deployment in South Korea. With nearly zero sales revenue, Lotte Mart estimates total losses will amount to nearly one billion dollars by the end of this year should the trend continue.

Lotte Mart injected 360 billion won (US$318 million) of emergency funds into its Chinese retail business in March and recently chose to pour in an additional 340 billion won to sustain operations there. E-Mart logged operating losses of over 150 billion won from 2013 to 2016. Roughly 90% of Lotte Marts have closed due to reasons such as alleged fire safety violations.



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