South Korean discounter E-Mart is to close down its China business.
For 20 years, E-Mart China has battled to be profitable. Now it says the diplomatic dispute over the location of the THADD missile defence system has proven the final straw, leaving “little leeway for a turnaround” the Korean news agency Yonhap reported.
“We’re looking at a complete closure by the end of this year, given that we reached a compromise on the issues with staff employment and the lease,” an unnamed official told Yonhap.
E-Mart China has been downsizing since 2011 and now has just six stores operating, mostly in Shanghai. These stores will be sold in coming months.
E-Mart’s parent Shinsegae first entered China in 1997 with ambitious plans for 1000 stores. But it only managed to open 26 in 2010 and started downsizing the following year after reporting a loss of US$88.3 million.
Rival Korean retailer Lotte has temporarily closed most of its 99 stores in China after Beijing ratcheted up pressure on South Korean companies following plans to locate US-made missile defence systems on Korean soil.
“It will be a long time before any Korean retailer decides to tap into China again, since E-Mart and Lotte have suffered such pain,” an industry watcher told Yonhap.