As missile row drags on, South Korea's Lotte still stymied in China

SEOUL, June 16 (Reuters) - Five weeks after a liberal president took office in South Korea pledging to ease tensions with China over a controversial missile defense system, the company at the centre of the dispute says it has yet to see any improvement.

Lotte Group, which provided land in South Korea for the U.S. THAAD missile system, says it has fixed safety issues at dozens of its Lotte Mart retail stores in China which local fire authorities had shut down earlier this year.

The family-run Korean conglomerate said it has repeatedly asked fire authorities to come and inspect the stores. Some stores have had no response, while others have simply been told to wait, said a Lotte official in Shanghai.

“Not a single visit has been made in the past couple of months,” said a Lotte Mart official in Seoul.

Seventy-four of Lotte’s 99 Mart stores in China were closed by fire authorities over safety violations such as boxes blocking exit doors.

South Korea and ally the United States say the THAAD system is designed to thwart nuclear-armed North Korea’s missile threat, but Beijing says the system’s powerful radar can also reach far into its territory.

China has pressured South Korean businesses via boycotts and bans, such as ending Chinese group tours to South Korea, but Lotte has been among the hardest hit by moves seen as punishment for it agreeing to hand over a golf course it owned in southern South Korea so the Terminal High Altitude Area Defense (THAAD) battery system could be installed there.

“We are seriously worried. We did not expect the shutdown to last this long. We thought China would just scare us and that’s it,” said the Lotte official in Seoul.

That official said Lotte Mart, a supermarket chain run by Lotte Shopping, has been losing around 100 billion won ($88.5 million) a month in wages and lost sales since March, and can’t lay off its 12,000 staff under Chinese rules, though it can reduce pay.

Lotte had hoped the election of Moon Jae-in as South Korea’s president on May 9 would signal an easing of its problems in China as Moon had vowed to review the previous government’s deployment of the THAAD system.

Last week, Moon ordered THAAD’s full deployment be suspended until a review of its environmental impact. But Seoul has also sought to assure the United States, saying the deployment decision won’t be reversed and the elements of the battery already installed - two of six launchers and a powerful radar - would stay.

China’s President Xi Jinping said on May 19 he wanted to put ties with South Korea back on a “normal track”, but Beijing urged Seoul to respect its concerns and resolve tensions over the THAAD deployment.

“We remain pessimistic,” said the Lotte official in Seoul. “Unless Korea offers concrete benefits to China, it will be difficult for China to allow the re-opening of our stores.” (Reporting by Heekyong Yang and Hyunjoo Jin; Editing by Soyoung Kim and Ian Geoghegan)