With tensions still running high over Seoul’s planned deployment of the US-backed THAAD missile defense system, Hyundai has sparked yet more concerns about the economic implications of the ongoing political standoff after announcing that it has suspended production for a week at one of its four factories in China.
Already, the fallout from Beijing’s anger over the defense system has wreaked havoc on the South Korean tourism industry and South Korean business — the Lotte Group in particular. According to Reuters, industry officials and analysts believe that Hyundai may have suspended the plant to bring down inventories to deal with slowing sales in China — one of the company’s most important foreign markets, accounting for 25% of its total sales.
For its part, Hyundai has said that production at the factory in Hebei is being suspended in order to “check its production line to modify technology.” In the past, Hyundai officials said that the company was not likely to be targeted in the THAAD blowback, because its China operations were so closely linked to the state. Hyundai currently has four factories in China, all of which are operated under a 50-50 joint venture with state-owned Beijing Automotive.
But all these reassurances didn’t stop Hyundai’s shares from slipping as much as 3% on Monday.
The THAAD dispute has turned China into South Korea’s second-least favorite country, more hated than even Japan, its former colonizer. We’ll have to wait and see what this means for Chinese auto sales in South Korea…
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