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Korea’s Lotte Runs Into Trouble in China After Angering Beijing Over Missile Deal

Variety logo Variety 3/2/2017 Patrick Frater
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Lotte, one of South Korea’s leading entertainment groups, has run into major difficulties in China after angering the Beijing regime with its role in a defense agreement between Korea and the U.S.

On Tuesday, Lotte agreed to provide a piece of land that the government in Seoul wants to use for the deployment of an American-made missile system known as THAAD. China strongly opposes the deployment of THAAD and had warned Lotte that its collaboration would have consequences.

Shortly after Lotte announced its decision to turn over the land, its Chinese website, Lotte.cn, suddenly became unavailable. Lotte said in a statement that its website had been the victim of a virus planted by hackers.

The same day, Chinese e-commerce site JD.com removed the Lotte shopping site from its platform. JD, which is partly owned by Tencent and by Walmart, blamed technical issues, according to Korean media reports.

Construction of a huge Lotte shopping and entertainment complex in the northern Chinese city of Shenyang had already been halted. Fire-safety regulations have been given as the explanation.

While retaliation by the Chinese government is hard to prove, the state-run Xinhua news agency said Lotte was “opening a Pandora’s box in Northeast Asia” with its decision to grant land for the missile system. In a separate opinion piece, Xinhua warned that “the decision could turn into a nightmare for Lotte, which depends heavily on Chinese tourists to South Korea for revenue from duty-free stores.”

The Global Times tabloid, which hews to the Beijing regime’s line, said: “Chinese consumers should become the main force in teaching Seoul a lesson, punishing the nation through the power of the market.”

Korea’s official Yonhap news agency is also reporting that Chinese streaming platforms have removed nearly all Korean content from their sites. Korean music and TV dramas, including “Descendants of the Sun” and “Running Man,” have been hugely popular in China.

In July last year, when THAAD first became a major concern, Korean entertainment companies began to feel a pushback from China. Co-productions were halted, and Korean performers, who had been rising in popularity in China, found that they were no longer welcome.

Lotte has diverse interests from retail and food to hotels, and has revenues in China of some $2.64 billion (KRW3 trillion). It operates Korea’s second-largest cinema chain, and has 11 multiplexes, with 90 screens, in China.

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