A Lotte Department Store in Nankai District, Tianjin City, China. It is said to be suffering from deficit./ Source from search engine Baidu.

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By Hong Soon-do, Beijing correspondent, AsiaToday - Lotte Group is reported to have lost more than 1 trillion won from its operations in China, and it seems clear that Lotte's shortfall will continue to grow in the future. If this situation drags on, Lotte might have to cope with astronomical deficit. In short, China could be a black hole for Lotte Group.

You might say that such assertion is too exaggerated, considering the business style of Lotte Group, which is well known for its conservative approach to business in both Korea and China. However, it's not an exaggeration, according to Mr. K, a CEO of a Chinese company and a former Lotte Group executive in charge of distribution business in China. In a telephone interview with AsiaToday on Tuesday, he said, "Lotte Group is operating 103 Lotte Mart stores in China. But only a few number of stores are making profits. Things are not much different with its five department stores and other businesses in China," claiming that Lotte Group's deficit operation in China is ongoing. He also expressed concerned over Lotte's business in China due to a slim chance of improvement in the future. He said that if the situation worsens, Lotte Group might close the most stores of Lotte Mart or sell department stores, widening its deficit like a snowball.
 
When asked about the reasons for Lotte Group's struggle in China, K said, "They don't know about China. They made an investment without setting up a careful plan. Besides, there was a lack of management," claiming the tragedy is only to be expected.

However, he was negative about slush fund rumors of Lotte Group, which have been spread once within the Korean community in Beijing. "I heard about the rumors. But it's not easy to do so. Even so, it won't be a large amount of funds."

If Lotte continues to suffer astronomical losses in China, its headquarters may be threatened at worst. This is why Lotte Group should examine its Chinese operations right now in order to minimize risks.