South Korean conglomerate Lotte will likely relinquish its golf club in the rural town of Seongju so the land can be used for the deployment of a US air missile defense system, informed sources said Friday, despite possible repercussions for its business in China.

According to officials from Lotte Group, Lotte International -- the owner of the Seongju golf club -- is expected to approve an exchange of the club for a piece of land in Namyangju, Gyeonggi Province, currently owned by the military.

The group and the government reached a tentative deal late last year to exchange the golf course for the military-owned land after the government named the southeastern county and the Lotte golf course there the strategically best site for the Terminal High Altitude Area Defense system.

Lotte was earlier expected to approve the deal at the start of the year but has apparently delayed the move amid growing concerns over possible damage to its business here and in China.

In the first quarter of last year, the amount spent by Chinese customers accounted for 70.8 percent of Lotte's overall sales at its duty-free shops, according to earlier data from the company.

A company official noted the group has recently decided to go ahead with the deal in that it is related to national security.

"The golf club will be exchanged with land of equal value based on an appraisal," the official said, asking not to be identified.

The official noted such a decision still required approval from Lotte International's board of directors but said the board will have no reason to object.

"As the land in Namyangju the group will receive in return is closely located to Seoul, the group should be able to find many uses for it," he said.

Other officials agreed that the group will not turn down the government request but said it may take more time for Lotte International to examine the proposed deal as any loss incurred by the exchange could lead to legal actions by its shareholders.

An earlier evaluation had the Seongju golf course valued at 45 billion won ($38.3 million), and the military-owned land in Namyangju at 140 billion won.

Military officials have ruled out the possibility of a one-on-one exchange, saying Lotte will be provided with only a part of the land to match the value of its golf course in Seongju, located 290 kilometers southeast of Seoul.

Many at Lotte, however, insist the group must be somewhat compensated for a possible loss of business caused by the exchange, especially in China.

China strongly opposes the deployment of the THAAD system in South Korea, partly pointing to a possible arms race it will trigger in the region.

Already, the Chinese government launched an all-out tax audit and various other safety and quarantine inspections on all Lotte-affiliated businesses in China that include some 150 Lotte department stores and Lotte Mart discount outlets.

"Lotte has more than 150 branches in China in the retail sector alone, and so damage to our business will be inevitable should the Chinese government decide to give us a hard time," a group official said. (Yonhap)