S. Korean brands feel the heat over Thaad

A Lotte department store in Shenyang, Liaoning province. The South Korean group on Monday approved a land-swop deal that moved the US' Thaad missile system closer to deployment. On Thursday, Lotte Duty Free said it had been the target of a suspected
A Lotte department store in Shenyang, Liaoning province. The South Korean group on Monday approved a land-swop deal that moved the US' Thaad missile system closer to deployment. On Thursday, Lotte Duty Free said it had been the target of a suspected Chinese cyber attack.PHOTO: AGENCE FRANCE-PRESSE

Chinese media, grassroots groups urge boycott over Seoul's planned deployment

SHANGHAI • South Korean firms are being squeezed in China, in suspected retaliation for Seoul's planned deployment of a US missile defence system, highlighting the tools China can deploy to hit back at the corporate interests of trade partners it disagrees with.

In China, state media and grassroots political groups have led angry calls to boycott popular Korean products, from cosmetics and supermarket chains to cars and tourism.

Beijing is furious over a joint plan by South Korea and the United States to set up the Terminal High Altitude Area Defence (Thaad) missile system in South Korea. Seoul and Washington say it will defend against nuclear-armed North Korean missiles, but Beijing says its far- reaching radar is targeted at China.

The dispute flared on Monday when Lotte approved a land-swop deal that moved the Thaad system closer to deployment. On Thursday, Lotte Duty Free, an affiliate of Korean conglomerate Lotte Group, said it had been the target of a suspected Chinese cyber attack.

The chief executive of Chinese retailer Jumei.com posted on his official microblog that his firm would no longer sell Lotte products.

"Some retailers have removed Lotte sales channels over the last week as a result of political pressure," said a senior China-based retail industry executive, asking not to be named due to the sensitivity of the issue.

Korean stocks plunged yesterday, hitting cosmetics giant Amorepacific Corp, carmaker Hyundai and airlines Jeju Air, Korean Air Lines and Asiana Airlines.

Some companies hinted at feeling political pressure to loosen or cut ties with South Korea.

South Korean media reported that China had ordered tour operators in Beijing to stop selling trips to the country.

Mr Kim Yeong Ju, an official at the Korea Tourism Organisation, said its Chinese counterpart issued the ban, which also covers flights to South Korea and hotel bookings. Almost 50 per cent of the foreign visitors to South Korea last year were from China.

Three major Chinese tour operators Reuters spoke to, including China Youth Travel Service, said they were still offering South Korean tours. A customer service worker at Tuniu Corp, however, said the firm had stopped providing tours to South Korea, citing the Thaad controversy.

China's tourism administration posted a statement about South Korean "travel tips" yesterday, reminding Chinese holidaymakers "to soberly understand the risks of travelling abroad and carefully choose their travel destinations". The administration did not comment on any travel ban.

Mr Geng Shuang, spokesman for China's Foreign Ministry, said yesterday at a regular briefing that he was not aware of any measures taken by the tourism body at this time.

Meanwhile, the Communist Party Youth League at central and local levels also fanned the flames online, calling for consumers not to buy South Korean products.

The consumer backlash followed. Photos posted on Chinese social media showed a large group of people surrounding a smashed-up Hyundai car covered with black graffiti, prompting alarm over a repeat of issues that have faced Japanese carmakers.

Taking a cautious approach, the Global Times, a Communist Party-affiliated newspaper, said in an op-ed yesterday that "we have to sanction South Korea, but we shouldn't humiliate its national dignity and ordinary people".

Several major Chinese video websites have stopped screening some Korean entertainment, and broadcasters are cancelling appearances by South Korean bands, according to reports.

The chill facing Korea Inc points to a potential risk for American firms amid a more confrontational stance taken by new US President Donald Trump.

"What's happening to Korean companies now is a pretty good playbook for what might happen to US firms over the next year," said Mr Andrew Gilholm, director of analysis for China and North Asia at risk consultancy Control Risks.

REUTERS, BLOOMBERG, AGENCE FRANCE-PRESSE

A version of this article appeared in the print edition of The Straits Times on March 04, 2017, with the headline 'S. Korean brands feel the heat over Thaad'. Print Edition | Subscribe