The Economic and Political Fallout: China-South Korea Relations

This report analyzes the economic and political tensions between China and South Korea, stemming from the deployment of the THAAD missile system. It details China's economic boycott, including consumer boycotts, government actions against South Korean businesses (especially Lotte), and the suspension of projects. The report emphasizes the significant impact on South Korean businesses and highlights the challenges of operating in a market with a government that controls consumer behavior and exhibits strong nationalism. The report also mentions the upcoming meeting between President Trump and the Chinese premier, emphasizing the importance of the outcome for Korean firms. This analysis provides valuable insights into the risks and complexities of international business and the impact of geopolitical events on economic relations.

Krylova
Week 2 Progress
Team 7
The U.S. setting up of the Terminal High Altitude Area Defense system in South Korea
has indeed angered China and it has embarked on an economic war against them. Chinese
citizens have begun boycotting South Korean businesses, opposed tourism and even denied entry
to a famous K-pop group. Chinese government controlled media has only fueled this even more
by applauding the protests. This would certainly hurt South Korea since “China is Seoul's largest
trading partner, receiving one-quarter of South Korea's exports.” One Korean conglomerate that
gave up land for the THAAD system has been especially targeted, and 23 Lotte Mart stores in
China are being shut down left and right. Chinese companies have also gotten behind the
Chinese government and denied several services to Lotte industries around China. Also, a $2.6
billion theme-park project in northeastern China” was also suspiciously suspended under safety
charges. In total, Lotte has invested $9 billion on the Chinese market over the years. The drastic
measure the Chinese government took against the Lotte Conglomerate almost right away should
be very intimidating to any business seeking ventures in China. The Chinese government
outright temporarily ignored 26,000 jobs and still had the support of its people. Such a
governance is very authoritative since at its very basis it is a communist entity. The politicians in
China know how to control the people and how to twist their views. A business depends on the
consumer, and if government controls the consumer one’s true focus should be the puppeteer. If
the government doesn’t like the company, it is impossible to make business there. Making
business in a country with such a government and a people with such nationalistic feelings is
dangerous and it is an issue in management to take such a risk into going into a market such as

that. This coming week President Trump will go to China to negotiate with the Chinese premier
to resolve this issue, and whatever results comes out of there will greatly impact what managers
of Korean firms should do from now on. We will for sure look into more on that angle of this
topic soon.
Sources:
http://www.businessinsider.com/china-south-korea-economic-boycott-protests-over-thaad-
missile-system-2017-3
https://www.washingtonpost.com/news/josh-rogin/wp/2017/03/29/will-trump-stand-up-for-
south-korea-with-chinas-xi-jinping/?utm_term=.2013142a66be