(Yicai Global) May 11 -- Lotte Group plans to sell more than 50 discount stores in Shanghai and neighboring Jiangsu province as the struggling South Korean retailer heads for the exit after 11 years as sales collapsed amid a year-long diplomatic spat between Beijing and Seoul.
The divestment is expected to raise between KRW280 billion (USD263 million) and KRW290 billion and will leave the Seoul-based company with just 14 Lotte Mart supermarkets in central and northeast China, South Korea's Yonhap News Agency reported. The veteran retailer, which had 112 stores in China, decided in September to pull the plug on operations in the country.
Beijing's dissatisfaction with Lotte's decision to provide land in South Korea's southeastern rural county of Seongju for the deployment of a US Army anti-missile system has cost the company CNY7.1 billion (USD1.1 billion). Sales at its remaining Lotte Mart stores in China have plunged by more than 80 percent, the report said.
The company entered the Chinese market in 2007 and quickly expanded the number of its outlets until getting caught up in last year's political pinch.
Last month, it sold 22 stores in Beijing to rival Wumei Holdings Inc., which runs one of the country's largest retail chains called Wumart, for KRW248.5 billion. Lotte is in negotiations with a number of retailers to conclude sales of the remaining stores in the first half of this year, the report added.
Moreover, Lotte's operating profit from duty-free outlets fell to KRW2.5 billion last year from KRW330 billion in 2016 in reaction to the same incident. China banned package tours to South Korea in March last year, causing Chinese visitor numbers to the country to slump 60 percent between March and October last year. That cost the country some USD6.8 billion, according to South Korea's National Assembly Budget Office.
Editors: Emmi Laine, Mevlut Katik