SEOUL -- Top South Korean supermarket chain E-mart will withdraw from China, the vice chair of the company's parent said Wednesday, due to mounting losses amid souring relations between the two nations over the deployment of an anti-missile system.
E-mart will close its six supermarkets in China once store leases expire, said Chung Yong-jin, vice chair and a member of the founding family of the Shinsegae Group. This is the first South Korean company to exit the Chinese market since February, when a dispute flared over Seoul's deployment of the U.S. Terminal High Altitude Area Defense missile defense system.
As bilateral relations worsened, several South Korean businesses in the service sector recorded losses in China. Other such companies may follow E-mart out the door if conditions persist.
E-mart entered the Chinese market in 1997, expanding to 26 stores before shrinking due to growing pressure from local supermarket chains. The company was not ordered to halt its business, but sales seem to have dropped.
Chinese authorities did order the Lotte group to halt operations at around 90% of its supermarkets in the country. The remaining stores are doing no business, South Korea's Yonhap News Agency reports. Other South Korean companies have been hit as well, with Hyundai Motor's sales in China dropping by half. But Samsung Electronics plans an investment of some $9 billion in its Chinese semiconductor plant, an apparent attempt to signal the company's dedication to the Chinese market.
E-mart, South Korea's largest supermarket chain, operates 147 stores domestically and logged sales of around 14 trillion won ($12.5 billion) for the year ended in December while posting operating profit of 546.8 billion won.