Lotte property scheme gets go ahead as China-South Korea tensions ease
South Korean conglomerate’s supermarket business hard hit in China amid year-long row between nations over deployment of a missile defence shield
Lotte Corp said on Monday that a major property development in China had received approval from the local authorities to start a second phase of construction – the latest sign that tension between Beijing and Seoul is easing.
The announcement comes one week after an unexpected detente between the two countries which have been at odds over the deployment of a US anti-missile system in South Korea – a dispute that has battered South Korean businesses that rely on Chinese consumers.
The Lotte conglomerate has been among the hardest hit by the political tension after it agreed to hand over land for the defence system, angering Beijing which says the system’s radar can penetrate its territory.
A Lotte spokesman said the approval to build commercial complexes at its 66,000 square metre Chengdu land project, worth some 1 trillion won (US$895 million), came on October 31 – the same day that Seoul and Beijing announced they had agreed to mend ties.
But construction at Lotte’s Shenyang project, which covers 1.45 million square metres, remains suspended, said the spokesman for Lotte Corp, the conglomerate’s holding company.
Construction has been halted since a December inspection for fire hazards. Lotte plans to build flats and a theme park at the Shenyang project in addition to a department store and a cinema that are already open.
Lotte’s retail outlets have been particularly hurt by the political tension with most of its hypermarkets and supermarkets in China shut down. They are set to sold for a fraction of what it invested.
Shares in key Lotte units continued to climb on hopes of better earnings amid the thaw in tensions, with Lotte Shopping Co Ltd up 3.9 per cent on Monday, bringing its gains since October 31 to 12.9 per cent.
Hotel Shilla Co Ltd was up 3.7 per cent and has risen 6.1 per cent since last week.
