Lotte to face 'severe consequences' if it allows US missile system, warns China

Lotte is the eighth largest chocolate and gum brand in the Beijing metropolitan area.  Photo: Jaehwan Kim

China’s state media outlet Xinhua has urged Lotte to reject a US missile system on a golf course owned by the Korean conglomerate or face "severe consequences".

Xinhua’s statement came shortly after the South Korean government proposed to use a golf course, currently owned by Lotte, for the deployment of a US Terminal High Altitude Area Defense (THAAD) anti-missile system.

Washington and Seoul said the system is purely a defensive and protective measure for potential threats from North Korea, while China is concerned that it will pose a “severe threat” to its security interest, according to Xinhua.

While Lotte is still waiting for the final decision on the THAAD deployment, China’s state-controlled media outlet said Lotte, which credits 70% of its 2016 first-quarter earnings to sales made by Chinese customers at its duty-free shops, might lose a “large slice” of its business.

"The Chinese people will not support a company complicit in damaging China's interests," said Xinhua. "One misjudged step could have severe consequences," it said, urging Lotte to refer or reject the deal.

A top-selling confectionery brand in Beijing

Lotte Group’s confectionery division sells a number of sweets and snack products in China, according to confectionery trade body, China Candy.

In the Beijing metropolitan area, Lotte made up 6.3% of the overall chocolate market by the end of 2016, making it the eighth best-selling chocolate brand, China Candy data shows. Other chocolate brands include Mars-owned Dove with 14.8% market share; Ferrero with 13.9% market share; Hershey with 13.7% market share; LeConte, 13.1% market share; M&M’s, 11.2%; Cadbury, 7.5%; Nestlé, 7.4% and Milka, 5.2%.

Lotte is also ranked eighth in Beijing’s gum market, with 6.5% of share, with Mars and Wrigley making up the largest share. The only other Korean brand among the best-selling gum list is Orions, which owns 12.5% of the market.

Lotte did not immediately respond to our request for comment.

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