Lotte Group, South Korea’s fifth largest conglomerate, appears to be readying phasing-out of China following unexpected clampdown from authorities after a premise under its ownership has become a location to host a battery of antimissile Terminal High Altitude Area Defense (THAAD).

Lotte Mart recently decided to close three supermarkets in the vicinity of Beijing, according to Chinese industry sources on Sunday. Lotte Mart currently runs 99 large retail stores and 16 supermarkets across China.

“Lotte businesses and outlets in China were bombarded with over 200 visits from authorities for out-of-routine fire safety, hygiene and tax probes for two months after the THAAD issue surfaced. Some were fined,” said a person familiar with the matter in Beijing. “The hassle and pressure has caused Lotte to shutter three shops, the source added.

Seoul chose a a golf course owned by Lotte Group in southern region so that the battery is safely away from residential neighborhood due to strong protests from residents fretting safety and health concerns from highly powerful radar system.

Lotte Group may take this opportunity to re-examine its entire business in China to counter any business risk that could be increased when the THAAD installment is acted out. A proposed replacement of the group’s top executive in China is said to be linked to the current situation.

Lotte is estimated to have invested more than 10 trillion won ($8.78 billion) in China since 1994. Currently, 22 Lotte affiliates including Lotte Department Store and Lotte Confectionery operate across China with 26,000 employees. Lotte Group is also working on a 3 trillion won project to establish a shopping mall and a theme park in Shenyang. Chinese tourists are major customers of its tax free shops and department stores in Korea.

China has been slamming business and trade barriers on Korean goods and services as well as entertainers in protest to the decision to deploy a U.S. antimissile system in South Korea against escalated nuclear missile threat from North Korea due to concerns about its own military intelligence and infrastructure falling under the surveillance of U.S. radar.

The new U.S. Secretary of Defense James Mattis in Seoul last week in his first overseas trip reconfirmed the joint U.S.-Korea plan to install Thaad in Korea within the year.

By Park Man-won and Sohn Il-son

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