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Korean Cinema Group Lotte on the End of Missile Warning From China

Variety logo Variety 2/21/2017 Patrick Frater
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Lotte, the fifth largest conglomerate in South Korea and the second largest player in Korean cinema, has been warned by China that it will be punished if missile deployment goes ahead on land that it currently owns.

China has repeatedly voiced strong opposition to the deployment of the U.S.-made Terminal High Altitude Area Defense (THAAD) missile system, which the South Korean government says is necessary to protect it from attack by North Korea. China says that the system’s radar penetrates in to its territory and can be used for spying.

In an editorial, state-controlled news agency Xinhua warned of “severe consequences” and said that Lotte would be “playing with fire” if it goes ahead with a land swap that would lead to the Korean government’s acceleration of THAAD deployment. “Lotte Group is one decision away from becoming an accessory to the act,” Xinhua said.

This is not the first warning shot fired at Lotte. Earlier this month Lotte reported that Chinese authorities halted construction at a theme park and real estate project in Shenyang. The connection was not specified at the time.

In mid-2016 it emerged that China was using economic means to pressure Korea over THAAD. These included an unofficial halt to the use of Korean singing and acting talent in China and extra regulatory scrutiny for Korean cosmetics exports. The Bank of Korea has also said that Chinese tourist numbers are trending downwards.

If those measures were deliberately ambiguous, Xinhua’s warning to Lotte was not. “The Chinese people will not support a company complicit in damaging China’s interests… Lotte stands to lose Chinese customers and the Chinese market,” it said.

Lotte has over 150 branches in China in the retail sector, as well as 11 multiplexes with 90 screens. That makes it a small player in the 40,000-screen sector, but Lotte may have planned on building more. Last year it opened a small cinema in Hong Kong, a move that would allow it to operate theaters in mainland China on the same favorable favorable terms as other Hong Kong movie groups. Lotte also has food, retail, tourism, construction, finance and service industry businesses.

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