SEOUL -- Hit by China's retaliation for the deployment of a U.S. anti-missile system in South Korea, Hotel Lotte has shelved plans for an up to $4.5 billion listing in Seoul until its duty-free business has recovered.
Lotte Group President Hwang Gak-kyu said Monday that China's actions against South Korea and the company had seriously affected its duty-free business. China in March banned group tours from visiting South Korea and more than 50 cruise ships from the mainland cancelled planned stop-offs at Busan. Chinese tourists made 47.2% of foreign travelers to South Korea in February before the ban was implemented.
"It will take time to push for Hotel Lotte's IPO. It will be possible only when our duty-free business has recovered to some level," said Hwang at a hotel in downtown Seoul at a 50th anniversary celebration of the group's launch. "Our duty-free business was affected considerably by China's anti-THAAD sentiment."
Hotel Lotte said that sales at its duty-free shops dropped 30% in March from a year ago after it signed an agreement to swap its golf course in the southeastern rural town of Seongju with the defense ministry in February. The land has been acquired for the U.S. military's Terminal High Altitude Area Defense system, or THAAD.
Beijing opposes deployment of the anti-missile system, saying that THAAD radars could screen and monitor China. But the U.S. and South Korea argue that the system will defend against North Korean missiles.
As punishment, China has also suspended the operation of more than 80 discount outlets of Lotte Shopping in March. On a wider level, China has banned South Korean pop concerts and tampered with the images of pop stars and actors in Korean programs.
But Lotte Group says the company will continue to invest in China and strengthen its presence there because of the market's huge potential. Lotte Group has expanded in the country considerably since it launched a confectionery operation in China in 1996.
On Sunday, Lotte Group opened its 555m World Tower in southern Seoul, the highest building in the country. The 123-story tower, which includes a luxury hotel, residences and offices, is located by the group's amusement park Lotte World Adventure. Shin Dong-bin, chairman and CEO of Lotte Group, says the group hopes that World Tower will help boost tourism.
Lotte Shopping shares rose 1.15% to 220,000 won on Monday, but had plunged more than 20% from mid-February to early-March, hit by China's ban. By comparison, the benchmark Kospi was marginally higher by 0.34% at 2,167.51 on Monday.