SOUTH KOREA. Lotte Group has deferred its long-awaited IPO due to plummeting sales at Lotte Duty Free caused by fall-out from the THAAD anti-missile system dispute.
In common with all Korean travel retailers, Lotte has been hard hit by a China National Travel Administration (CNTA) ban on group travel to South Korea that took effect on 15 March
“Since the damage to the duty free is so obvious, we are not able to proceed with the IPO process as planned,” a Lotte Duty Free spokesman told The Moodie Davitt Report.
The CNTA ban is part of a furious political and consumer backlash against the South Korean government’s decision to deploy the controversial US anti-missile system as a defence and deterrent against North Korean attacks. China considers THAAD a threat to its own security and to regional stability.
Korean travel retail giant Lotte Duty Free has felt the brunt of the backlash, due to parent Lotte Group’s agreement to site THAAD on company land. As reported, Lotte Group websites have been attacked and its stores and products subjected to boycotts in China.
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South Korea’s exposure to any downturn in Chinese arrivals is acute. For the first two months of 2017, Chinese visitors accounted for 46.8% of all arrivals and around 70% of duty free spending. The next biggest group (see table) was the Japanese, with a 13.7% share.
Lotte Duty Free has even introduced plain, unbranded shopping bags at its airport and downtown stores to aid Chinese shoppers worried about taking Lotte-branded bags into China.
