Editorial Notes

Can Moon help businesses as China retaliates over THAAD deployment? The Korea Herald

In its editorial on Sept 18, the paper urges the government to take steps to minimise the damage to businesses as China retaliates over the deployment of the US anti-missile system in South Korea.

A Lotte Mart is seen closed in Jiaxing, Zhejiang province, China, on Sept 8, 2017. PHOTO: REUTERS

SEOUL (THE KOREA HERALD/ASIA NEWS NETWORK) - Lotte Mart will effectively withdraw from China about nine years after it entered the country in 2008. It recently selected Goldman Sachs to manage the sell-off of all its China stores.

The decision is viewed as a bitter pill to swallow, as 87 of its 112 stores in China have been suspended and the remaining suffer lagging sales.

Lotte has been the main target of China's economic retaliation for the deployment of the Terminal High Altitude Area Defense (THAAD) anti-missile system since it accepted a land swap offer by the Ministry of National Defense in November last year, whereby Lotte handed over a golf course as a site for the system.

Beijing conducted tax probes of all Lotte stores in China late last year and eventually began to suspend the stores from March for an ostensible reason of the violation of fire safety laws.

Economic retaliations have not been limited to Lotte Mart.

The 3 trillion won (S$3.57 billion) project to construct a Lotte theme park in Shenyang has been suspended by Chinese authorities, which took issue with the construction site's preparedness for fire emergencies.

E-mart, one of South Korea's largest discount outlets, is shutting down its China business due to widening losses and worsening business conditions stemming from China's hostile policies on Korean companies after the THAAD deployment.

Hyundai Motor saw its sales in China to plummet in the second quarter, partly because Chinese consumers turned away from its cars in nationalist backlash against Seoul's decision to host THAAD.

The second-quarter net profit of AmorePacific, the South's top cosmetics maker, plunged 59.8 percent from a year earlier, due largely to a slump in domestic sales and a sharp decline in Chinese tourists. Beijing banned sales of Korea-bound package trips beginning mid-March.

It is a disgraceful and unreasonable deed for China to retaliate Korean companies this way over the THAAD deployment.

As has been pointed out repeatedly, the system is self-defence to fend off missiles from North Korea. No North Korean threats, no THAAD. The system is an inevitable choice for security and survival.

It would be hard to deny that Beijing is responsible to some degree for the North's nuclear and missile provocations which it should have done more to stop. It is disingenuous of China to be passive to sanctions against the North and at the same time to take it out on the South's companies.

Beijing must focus on pressuring the North and stop unjustifiable economic retaliation against the South companies.

It should bear in mind that retaliation is a short-sighted, penny-wise and pound-foolish measure.

Calls are mounting in Korea for companies to decrease their investments in China and turn their eyes to other markets, including Southeast Asia.

Lotte Mart's exit and other episodes of economic retaliation will show foreign global companies the real face of a state where its totalitarian authorities play an invisible hand to disable free market activity.

The Korean government, meanwhile, is sitting on its hands.

A spokesman of the presidential office said, "There will be no petitions to the World Trade Organisation. Cooperation with China is important."

Of course, filing WTO complaints against China will not be easy, considering the procedural complexity and questionable effectiveness. Yet the sheer act of raising the issue on the international stage will put pressure on China.

Cheong Wa Dae (Seoul's presidential office) took this option off the table early and of its own accord.

Now, Korean companies are left to themselves. They are in a fix where they have to find ways to save themselves. Lotte has suffered tremendous loss for cooperating with the government, but no one listens to its complaint.

A difficult government position over North Korea is understandable, and yet it should not look on as Korean companies have been unfairly retaliated. The government should do its best to minimise damage due to THAAD woes.

The Korea Herald is a member of The Straits Times media partner Asia News Network, an alliance of 23 news media entities.

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