Non-tariff Barrier
As China has been taking retaliatory measures against Lotte, which provided a site for the Terminal High Altitude Area Defense (THAAD) system, Lotte Chemical suffered from a reprisal.
According to the chemical industry on March 29, since February when Lotte decided to provide the THAAD site, Chinese banks have toughened regulations on issuing letters of credit (LCs) to Chinese importers trading with Lotte Chemical.
It is said that Chinese importers spent time, urgently looking for other banks, causing a disruption in the cargo trade of Lotte Chemical products going into China.
"Recently, Chinese banks became quite finicky about issuing letters of credit to our Chinese buyers or their issuances are being delayed," said an official at Lotte Chemical.
Lotte Chemical exports PP (polypropylene) and other synthetic resin products to China. As the company produces intermediate goods for final products, Lotte Chemical carefully predicts that there will be no strong pressure on Lotte Chemical products unlike Korean consumer goods. Korean petrochemical companies’ exports to China account for 45.5% of their total exports.