SEOUL (THE KOREA HERALD/ASIA NEWS NETWORK) - South Korea's Lotte Group has decided to borrow another US$300 million (S$408 million) to support Lotte Mart in China, according to the company on Thursday (Aug 31), as the discount chain continues to struggle amid negative Chinese consumer sentiment towards South Korea.
The funds will come through Lotte Shopping Holdings in Hong Kong, which owns the Lotte Mart China corporation.
This the second loan made to Lotte Mart China, following an initial loan in March of a similar amount.
In March, China began intensifying retaliatory actions against South Korea and Korean businesses in China for its decision to install an American anti-missile system here.
Of the US$300 million, approximately US$200 million will be used to pay back Lotte Mart China's short-term loans, while the remaining amount will be used to support operations in China.
Lotte Mart currently operates just 12 stores in China, with 74 having been shuttered owing to regulation violations and 14 voluntarily suspending operations.
The 12 stores are open but "struggling", according to an official with Lotte Mart.
The company has denied rumours that it is planning to pull out of China, but with the retaliatory crisis continuing for six months, industry watchers speculate that it will be difficult for Lotte Mart to hold out without additional measures such as closing down stores.
Emart, a rival Korean retail chain owned by Shinsegae, announced that it would be closing all its China operations by the end of the year.