BEIJING: China’s appeal as a gold mine for foreign businesses is waning, and while some multinationals ponder their future in the world’s biggest consumer market, one group of companies is already headed for the exit.

       South Korean firms are at the vanguard of what’s threatening to be a global shift away from China, with the higher tariffs and inconveniences of the trade war now compounded by disruptions wrought by the country’s zero-tolerance approach to Covid-19.

       Retail giant Lotte Group, known for its department stores and supermarkets, is in the final stages of shutting its China headquarters and is pivoting its focus to other Asian markets, a person familiar with the situation told Bloomberg News, asking not to be identified because they’re not authorised to speak publicly.

       Seoul-based cosmetics maker Amorepacific Group has closed more than 1,000 stores as the disruptions of the pandemic added to worsening consumer confidence in China, though it’s seeking to push more sales online.

       Meanwhile, South Korean manufacturing giants like Samsung Display Co and LG Electronics Inc are already shutting some factories in China, pressured by cheaper local rivals and the uncertainty caused by China’s ongoing and intensive lockdowns.

       “China is not a land of opportunity anymore for South Korea,” said Scott Kim, who formerly worked as head of Shanghai and Beijing offices at Kotra, a unit under the South Korean trade ministry.

       “China’s zero-Covid policy is too much, and Chinese companies are catching up with South Korean companies. It would be better for South Korean companies to abandon their fantasy about making money in China.”

       It’s a sea change for South Korean companies that in recent decades had joined Western peers in betting much of their future growth on the giant pool of consumers across the Yellow Sea, helped by the cultural influence of South Korean entertainment, make-up and fashion.

       China’s total retail sales reached 44 trillion yuan (US$6.6 trillion or RM29 trillion) in 2021, including 402.6 billion yuan (RM264.4bil) spent on cosmetics, according to government data.

       But the seeds of the South Korean retreat predate the virus curbs that are disrupting global supply chains and even the trade war, which triggered an initial rush by manufacturers to diversify their operations to places like Vietnam.

       South Korea and its companies landed in Beijing’s cross-hairs in 2017, when China channelled its anger at Seoul agreeing to host a US anti-missile system into consumer boycotts and bans. South Korea’s close diplomatic ties to Washington are an ongoing source of tension with China. — Bloomberg