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NOT SO SWEET

The maker of Choco Pies is facing a revolt in China from customers, partners, and hackers

Illustration photo of the Lotte website on Mar.2 2017.
Reuters/Thomas White
Down for some reason.
  • Echo Huang
By Echo Huang

Reporter

Published This article is more than 2 years old.

China made its threats, and now it’s following through.

Over the past few months, Beijing has been pressuring Lotte Group, a major South Korean conglomerate, to not sign a land-swap deal with the military. The arrangement would give the company land near Seoul in exchange for a golf course, which would host an antimissile system that Beijing opposes. Lotte signed the deal on Feb. 28.

Operating around the world, Lotte Group has dozens of business units and is involved in everything from candy to hotels to financial services. It’s perhaps best known for confectionaries, including Choco Pie. Its Lotte Shopping retail unit has over 150 branches in China.

Since Lotte signed the deal, Chinese consumers, hackers, business partners, and bureaucrats have been taking action against it. Examples include:

  • On March 1, authorities in Beijing fined a Lotte retail store 44,000 yuan ($6,400) for putting up an “exaggerated medical advertisement.” Similar ads had never drawn such scrutiny before (link in Chinese).
  • On March 1, officials in the central city of Wuhu confiscated 30 radio monitoring and detecting machines in a Lotte retail store because they were unregistered (link in Chinese), and imposed fine of 20,000 yuan.
  • On March 2, Weilong, a Chinese maker of spicy snacks, removed its products from Lotte’s retail branches across the country. “We will no longer cooperate with Lotte,” it said in a statement (link in Chinese).
  • On March 2, in the northeast city of Qingdao, a sanitation bureau destroyed 300 boxes of Lotte candy, saying it had detected a banned additive.
  • On March 1, Chinese hackers disrupted Lotte’s Chinese website, and then the site for its Duty Free stores.
  • Around China this week people have taken to the streets to protest against Lotte. A group in the southeastern Zhejiang province held up a banner reading, “Lotte declares war on China by supporting THAAD, so stay out of China.”

South Korea and the US agreed last July to deploy the Terminal High Altitude Area Defense (THAAD) antimissile system somewhere on the Korean peninsula. Beijing fears the system—though intended to thwart an attack from North Korea—could neutralize its own weaponry.

Beijing couldn’t force Seoul to renege on the agreement with Washington, so it tried persuasion, using bureaucracy to make life difficult for South Korea and its companies. Korean news agency Yonhap has counted over 40 examples, ranging from delaying textbooks at customs to denying K-pop stars permission to perform.

Lotte Group came under pressure before signing the deal this week. On Feb. 8 a fire inspection led to a construction halt at a multi-billion-dollar Lotte real estate project in China’s northeastern city of Shenyang. Since December authorities have used tax investigations to pester many of Lotte’s businesses in China.

For the maker of Choco Pies, life in China won’t likely get sweeter anytime soon.

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