Lotte Mart, discount store unit of South Korean conglomerate Lotte Group, will inject $300 million in emergency fund into its Chinese subsidiary to help it sustain operational losses as it needs to pay employees even under business suspension in retaliation for the conglomerate’s yielding of land lot to the Korean government to host U.S-owned missile defense system Terminal High Altitude Area Defense (THAAD).

According to Lotte Mart on Thursday, Lotte Shopping Holdings (Hong Kong) Co. will borrow $300 million from Chinese financial institutions. Lotte Shopping Holdings owns and manages Lotte’s discount store and department store businesses in China on behalf of the head office in Seoul. The company will use $210 million to repay Lotte Mart’s short-term debts in China and the rest as general operational expenses.

It is the second time this year for the Korean retailer to come to its Chinese subsidiary’s rescue. The company injected 360 billion won ($319.1 million) emergency fund in March, which has already been entirely used up, said a Lotte official. The extra $300 million will keep the operation afloat until the end of this year.

China has launched retaliatory actions against Korean companies over Seoul’s decision to deploy THAAD, citing its surveillance reach to the mainland China. The blow on Lotte’s operation in China has been harder after the company yielded its golf course to host THAAD battery.

The retailer had been forced to close down 87 of its 122 Lotte Mart outlets in China after a serious of retaliatory actions including tax and safety inspection and Chinese consumers’ boycott on Lotte products. Sales from the 12 Lotte Mart outlets that have remained in operation plummeted 80 percent

Lotte Mart’s losses in China over the past four years have ballooned to 496 billion won and are likely to widen to 1 trillion won by the end of this year if the diplomatic standoff fails to ease.

Although Lotte Mart’s operation has been forced out of business, it still has to pay local employees 70 percent of normal wage under local labor law as well as make monthly payments on rent and product purchases. The retailer reportedly needs around 90 billion won every month for operational expenses like wage and rent in China.

By Sohn Il-seon

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]