BAIC-Hyundai bickering bursts into public view
Chinese partner angered By South Korean automakers greed arrogance'
China’s BAIC Motor Corp is fed up with its South Korean partner Hyundai Motors Co’s “greed and arrogance” over a supplier issue for Beijing Hyundai Motor Co that has persisted since the two formed a joint venture (JV) more than a decade ago but recently the bickering became public amid sharp sales declines, sources familiar with the situation said.
“Officials at BAIC are very determined to solve the issue once and for all, even if
losing the JV,” an industry insider, who is in close contact with both BAIC and Beijing Hyundai, told the Global Times on Wednesday. Beijing Hyundai has become a burden for BAIC, which otherwise
is doing great, so the company is “wellpositioned” to deal with this, the insider said. The issue centers on whether the JV should switch suppliers to local Chinese companies to cut costs amid sharp sales declines and fierce competition – the solution favored by BAIC – or stick to the current suppliers, mostly South Korean firms, some of which have direct or indirect financial ties with Hyundai Group.
Neither BAIC nor Beijing Hyundai could be reached for comment as of press time on Wednesday.
The disagreements became public after Beijing Hyundai suspended production at four different plants in China due to payment arrears to suppliers.
On Tuesday, just days after the firms said that those four plants had resumed production, new reports said yet another plant in China had been closed.
“Like every fight between companies, the core issue is protecting their own interests,” one source said. But in this case, “Hyundai is too greedy,” the source said.
“Frankly, I think BAIC is fed up with Hyundai’s greed and arrogance,” another source, who is close BIAC, told the Global Times Wednesday. “Hyundai has basically traded the JV for its interest in suppliers.”
Both sources refused to be named bessue. cause of the sensitivity of the issue.
According to one of the sources, the problem dates back to 2002 when the JV was formed. At the time, the South Korean firm insisted that Beijing Hyundai would use the company’s long-time suppliers.
As one of many Chinese companies that were hungry at the time for foreign part. ners, BAIC agreed to the deal. Though the
brands“South have no Korean established competitive edge. Their best advantage was cost, but that’s gone for Hyundai because of its relatively high prices.” an auto industry source
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