Chinese employees at Lotte Mart's local affiliate stages a sit-in in front of the affiliate's headquarters in Beijing last week to urge the supermarket chain to guarantee their jobs. / Screen captured from Weibo



By Park Jae-hyuk



Lotte's attempt to pull its discount chain out of China is facing a strong backlash from the local employees there.



According to the conglomerate and social media, Sunday, 1,000 Chinese workers at Lotte Mart's Beijing affiliate staged a three-day sit-in last week in front of the affiliate's headquarters, in order to urge their company to guarantee their jobs and the same salary they were paid before the sell-off.



Since Lotte decided last month to sell 21 of its stores in the Beijing metropolitan area to local Chinese retailer Wumart Stores for 248.5 billion won ($231 million), the workers have been concerned about job security.



"Employees will not agree with unfair terms, and we will definitely fight to the end," a Weibo user wrote on the Chinese social media. "Now these ordinary Lotte Mart employees expect government intervention. If Lotte Mart really withdraws from China in such a manner, all the common laborers in the country will be bullied. All ordinary employees will fall victim."



Industry officials doubt the Chinese government may have used the workers to weigh on Lotte.



They expect Lotte Mart stores in other regions and Korean companies doing business in China will face similar difficulties, unless the Korean retail giant resolves the recent issue.



An industry source from the Korea Trade-Investment Promotion Agency (KOTRA) implied the Chinese authorities might play its role as a "cooperative bystander" on this issue, as they did when dealing with other foreign companies.



"Although it is true there have also been voluntarily organized collective actions in China before, it is hard to rule out the possibility of the Chinese government's interference in the recent protest," he said on condition of anonymity. "Because the Chinese authorities do not leave any official evidence behind, Lotte and the Korean government will be unable to wage a legal battle against the Chinese government, even if it actually intervened in the matter."



When the Chinese government ordered Lotte to stop opening its discount stores in China last year, the local authorities cited violations related to fire safety as a reason, avoiding a dispute with the Korean government that has regarded the measure as a retaliation against the conglomerate's provision of its golf resort as a site for the deployment of a U.S. anti-missile Terminal High Altitude Area Defense System (THAAD).



The Chinese government has also been allegedly forcing people to boycott Lotte and other Korean firms.



A Lotte Mart spokesman said he had not heard about this, attributing workers' misunderstanding to the recent controversy.



"Because M&A plans are confidential, we could not tell the local employees about the deal before the public announcement. The Chinese workers misunderstood details about the deal, due to the sudden notice," he said. "The composition of shareholders will be the only change to the local affiliate. Welfare and wages will be as same as before."



However, the Chinese workers in other areas may protest against Lotte's decision, given the company decided to shut 21 of its Lotte Mart stores in the Shanghai metropolitan area, which could not be sold to Liqun Group, a Chinese retail giant that will buy only 53 stores in the area for 291.4 billion won.



While regular workers at the 21 stores will be moved to the 53 stores, subcontracted workers will not be assured of working for the Korean company.



The spokesman said his company has not used any of the subcontracted workers at the 21 stores, since the Chinese government's suspension order on the stores in March last year.



Daishin Securities analyst Yoo Jung-hyun said Lotte's discount stores in China have shown 50 billion won to 60 billion won losses every quarter since March last year.



According to Lotte Shopping, its discount chain business posted 43.7 billion won in operating losses in the first quarter. The business's sales also dropped by 12.6 percent to 1.5 trillion won, due to the retaliatory measures.

